Question

. If shareholders are granted a preemptive right they will: Select one: a. be able to choose the timing and amount of any future dividends. b. be paid dividends prior to the preferred shareholders during the preemptive period. c. be given the choice of receiving dividends either in cash or in additional shares of stock. d. be entitled to two votes per share of stock. e. have priority in the purchase of any newly issued shares.

Answer 1

Answer:

Have priority in the purchase of any newly issued shares

Explanation:

Preemptive right is the right given to existing shareholders to maintain the proportion of their investment by buying a proportionate number of shares in any future sales of share.

The main essence of this is to ensure that their ownership interest is not diluted as more shares are issued and new investors come in.

In a preemptive share arrangement , consideration is given to existing shareholders ahead of any other person or entity .