If you own 1,100 shares (7% of a corporation's stock)and the corporation issues 14,000 new shares, how many of the new shares can your purchase under preemptive right?

Question

Quizplus · Accepted Answer

Preemptive right grants current shareholders the right to purchase new shares in proportion to their current ownership percentage before they are offered to the public. Since you own 7% of the corporation's stock, you have the right to purchase 7% of the 14,000 new shares the company plans to issue, which is 980 shares (0.07 x 14,000 = 980). Therefore, the correct answer is B) 980.

If You Own 1,100 Shares (7% of a Corporation's Stock)and