Preemptive rights allow common stockholders to maintain their proportionate ownership in the corporation when new issues are made.

Name: Preemptive rights allow common stockholders to maintain their proportionate ownership in the corporation when new issues are made.
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Question

Quizplus · Accepted Answer

Preemptive rights give common stockholders the right to buy new shares of stock in proportion to their existing ownership in the company, which allows them to maintain their ownership percentage and prevent dilution of their shares.

Preemptive Rights Allow Common Stockholders to Maintain Their Proportionate Ownership