SIE practice questionmediumPreemptive Rights
Which right allows existing common stockholders to purchase new shares before the general public?
- ASubscription right
- BPreemptive right✓ Correct answer
- CWarrant right
- DPut right
Explanation
Why B — Preemptive right
Preemptive rights allow existing shareholders the first opportunity to buy new stock, preserving their ownership percentage. Subscription rights are a form of this, but the term 'preemptive' is correct here; warrants and puts are unrelated.
Turn it into reps
Reading one answer is not the same as being ready
Lucky the Banker is a free practice app with 1,867+ SIE questions, weak-area tracking, and timed mock exams. No credit card, no paywall.
Spot an error in this question or explanation? Tell us — we fix these fast.
Related Equity Securities questions
- Convertible preferred stock allows the holder to:
- How do common stockholders typically vote in corporate elections?
- A warrant issued with a new stock offering:
- What effect does a 2-for-1 stock split have on an investor’s position?
- Book value per share is best described as:
- Participating preferred stockholders may receive:
- A company's price-to-earnings (P/E) ratio provides investors with an indication of:
- A cumulative preferred stockholder is entitled to: