Marvin owns 50 shares of stock in Richley Corp., which has a total of one thousand shares outstanding. If Richley decides to issue one thousand additional shares of stock and Marvin has preemptive rights, Marvin will be offered one hundred shares of the newly issued stock.

Question

Quizplus · Accepted Answer

Marvin originally owns 5% of the company (50 out of 1000 shares). If the company issues 1000 additional shares, to maintain his percentage, he should be offered the option to purchase 50 of the new shares, not 100.

Marvin Owns 50 Shares of Stock in Richley Corp