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.
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