You own 10 percent of the shares of common stock currently held in Zeerocks Corporation. At the most recent meeting, the board of directors authorized 100,000 new shares of stock to be sold to raise funds. As an existing shareholder, you may have a pre-emptive right to buy up to how many shares of the new stock before it is offered to the public?

Question

Quizplus · Accepted Answer

As an existing shareholder with a pre-emptive right, you have the right to buy a proportionate amount of the new shares relative to your current ownership percentage. Since you currently own 10% of the common stock, you have the right to buy 10% of the new shares, or 10,000 shares.

You Own 10 Percent of the Shares of Common Stock