The preemptive right gives current stockholders the right to purchase, on a pro rata basis, any new shares issued by the firm.This right helps protect current stockholders against both dilution of control and dilution of value.

Question

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The preemptive right indeed gives current stockholders the right to purchase any new shares issued by the firm on a pro rata basis, which helps protect their control and value in the company.

The Preemptive Right Gives Current Stockholders the Right to Purchase