Which of the statements below is FALSE?
A)If an investor purchases 20% of the initial issue of the company,the investor then owns 20% of the company,given the one vote-one share norm.
B)After an initial offering,the company can sell more shares to the public at a later date.If the investor who originally purchased 20% does not purchase 20% of the subsequent issue,his or her ownership is diluted below 20%.
C)A preemptive right enables one to maintain one's proportional level of ownership.
D)A preemptive right is never particularly valuable to shareholders with large ownership percentages.

Question

Quizplus · Accepted Answer

This statement is false as a preemptive right is particularly valuable to shareholders with large ownership percentages as it allows them to maintain their proportional level of ownership without being diluted by the issuance of new shares.

Which of the Statements Below Is FALSE