The right for existing owners to maintain their ownership share by purchasing sufficient shares to keep their percentage share of the firm is called:
A)a stock option
B)a stock warrant
C)preemptive rights
D)participating stock

Question

Quizplus · Accepted Answer

Preemptive rights allow existing owners to purchase enough shares to maintain their ownership percentage when new shares are issued. This helps to protect their investment and prevent dilution of ownership. Stock options and warrants are different types of securities that give the holder the right to purchase shares at a certain price, but they do not necessarily guarantee the ability to maintain ownership percentage. Participating stock is a type of equity security that entitles the holder to receive an additional dividend beyond the standard dividend paid to common shareholders, but it does not relate to maintaining ownership percentage.

The Right for Existing Owners to Maintain Their Ownership Share