If you own 700 shares (5% of a corporation's stock)and the corporation issues 17,000 new shares, how many total shares will you have after exercising your preemptive rights?

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Quizplus · Accepted Answer

Preemptive rights allow you to maintain your ownership percentage. Initially, you own 5% of the shares. To maintain this percentage after the issuance of 17,000 new shares, you need to buy 5% of the new shares, which is 850 shares (5% of 17,000). Adding these to your original 700 shares gives you a total of 1,550 shares.

If You Own 700 Shares (5% of a Corporation's Stock)and