Use the following statements to answer this question:
I.Today, the pre-emptive right is always used by corporations to protect their investors from dilution.
II.A common share has the characteristics of a call option because it has unlimited upside potential.
A)I and II are correct.
B)I and II are incorrect.
C)I is correct and II is incorrect.
D)I is incorrect and II is correct.

Question

Quizplus · Accepted Answer

I is incorrect because the pre-emptive right is not always used by corporations; it's an option that can be included in the corporate charter but is not universally applied. II is correct because common shares do indeed have characteristics similar to call options, including the potential for unlimited upside.

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