15. The preemptive right is important to shareholders because it
a. allows managers to buy additional shares below the current market price.
b. protects bondholders, and thus enables the firm to issue debt with a relatively low interest rate.
c. protects the current shareholders against a dilution of their ownership interests.
d. is included in every corporate charter.
15. The preemptive right is important to shareholders because it
a. allows managers to buy additional shares below the current market price.
b. protects bondholders, and thus enables the firm to issue debt with a relatively low interest rate.
c. protects the current shareholders against a dilution of their ownership interests.
d. is included in every corporate charter.
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Related questions
QUESTION 10
Short-term bond yields are generally ______ than long-term bond yields, whereas long-term bond prices are generally ________ than short-term bond prices.
| more volatile, less volatile | ||
| less volatile, more volatile | ||
| less volatile, less volatile | ||
| more volatile, more volatile |
2.5 points
QUESTION 11
Common stockholders have a residual claim to income, in other words they are last in line.
True
False
2.5 points
QUESTION 12
Stock classes are similar to bond ratings in that they are used to rank the performance of different corporations' stock.
True
False
2.5 points
QUESTION 13
The particular type of shareholder voting used has become less important with the influence of takeovers, leveraged buy-outs, and other challenges to management control.
True
False
2.5 points
QUESTION 14
Which of the following is not a true statement?
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| A minority interest can still elect members to the Board of Directors under cumulative voting even though someone else owns 51% of the stock. |
2.5 points
QUESTION 15
The purpose of cumulative voting is
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| to prevent the dilution of common stock through preemptive rights offerings. |
2.5 points
QUESTION 16
A rights offer made to existing shareholders with the sole purpose of making it more difficult for another firm to acquire the company is called
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2.5 points
QUESTION 17
A possible advantage to a rights offering is that
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2.5 points
QUESTION 18
Which of the following actions will provide the shareholders with the most total wealth when a company conducts a rights offering?
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2.5 points
QUESTION 19
The subscription rate of a new offering is generally _______ than the rights-on price and _______ than the ex-rights price.
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| lower; lower |
