1) It is frequently stated that the one purpose of the preemptive right is to allow individuals to maintain their proportionate share of the ownership and control of a corporation.

1. How important do you suppose control is for the average stockholder of a firm whose shares are traded on the New York Stock Exchange?
2. Is the control issue likely to be of more important to stockholders of publicly owned or closely held (private) firms? Explain.

2) If you bought a share of common stock, you would probably expect to receive dividends plus an eventual capital gain. Would the distribution between the dividend yield and the capital gains yield be influence by the firm's decision to pay more dividends rather than to retain and reinvest more of its earnings? Explain.