1. Rights and privileges of common stockholders Larry Nelson holds 1,000 shares of General Electric's (GE) common stock. The annual stockholder meeting is being held soon, but as a minor shareholder, Larry doesn't plan to attend. Larry did not sell his shares but gave his voting rights to the management group running General Electric (GE). Larry must have signed a proxy that gives the management group control over his shares. Larry also holds 2,000 shares of common stock in a company that only has 20,000 shares outstanding. The company's stock currently is valued at $46.00 per share. The company needs to raise new capital to invest in production. The company is looking to issue 5,000 new shares at a price of $36.80 per share. Larry worries about the value of his investment. If the company issues new shares and Larry makes no additional purchase, Larry's Larry's current investment in the company is $92,000 investment will be worth $220,800 This scenario is an example of dilution . Larry could be protected if the firm's corporate charter includes a preemptive right provision. If Larry exercises the provisions in the corporate charter to protect his stake, his investment value in the firm will become