Question 12
Business FinanceA provision in the charter of a company which gives holders of common stock the first option to purchase additional issues of the firm's common stock is the
- A.pre-emptive right
- B.shareholders right
- C.ex-dividend right
- D.over-subscription right.
Show the answer and explanation
Answer: A (pre-emptive right)
Explanation
A pre-emptive right lets existing shareholders buy new shares before outsiders so their share of ownership is kept.