Keith wants to buy stock in a large pharmaceutical company. Since he lives in the city where the company is headquartered, he wants to attend its annual meetings and vote for the board of directors. He also wants to maintain a 5 percent ownership of the company, so having priority in purchasing new shares on the marketplace is very important to him. What type of stock should Keith purchase?

Question

Quizplus · Accepted Answer

Since Keith wants to vote for the board of directors and maintain a 5 percent ownership of the company, he should buy common stock. Common stockholders are usually entitled to one vote per share of common stock. Additionally, they have a preemptive right to purchase new shares of the stock from the corporation, which allows them to maintain their original percentage of ownership by buying new shares when they become available.

Keith Wants to Buy Stock in a Large Pharmaceutical Company