Which statement concerning common stock and the investment banking process is NOT true?
A)The preemptive right gives each existing common stockholder the right to purchase his or her proportionate share of a new stock issue.
B)If a firm sells 1,000,000 new shares of Class B stock, the transaction occurs in the primary market.
C)Listing a large firm's stock is often considered to be beneficial to stockholders because the resulting increases in liquidity and reputation probably outweigh the additional costs to the firm.
D)If stockholders are dissatisfied with management's performance, an outside group may ask the stockholders to vote for it in an effort to take control of the business. This action is called a tender offer.

Question

Quizplus · Accepted Answer

A tender offer involves an outside party offering to purchase shares from existing shareholders at a specified price, typically at a premium to the market price, in an attempt to gain control of the company. It is not simply asking stockholders to vote for a new management team; it is a direct financial offer to buy shares.

Which Statement Concerning Common Stock and the Investment Banking Process