If you own 500 shares (2% of a corporation's stock) and the corporation issues 15,000 new shares, how many total shares will you have after exercising your preemptive rights?

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Quizplus · Accepted Answer

Preemptive rights allow existing shareholders to maintain their percentage of ownership when new shares are issued. If you own 2% of the corporation's stock and the corporation issues 15,000 new shares, you have the right to purchase an additional 2% of those new shares to maintain your ownership percentage. 2% of 15,000 is 300. Therefore, after exercising your preemptive rights, you will own your original 500 shares plus an additional 300 shares, totaling 800 shares.

If You Own 500 Shares (2% of a Corporation's Stock)