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Rights and privileges of common stockholders Larry Nelson holds 1 , 0 0 0 shares of General Electric ( GE ) common stock. As a
Rights and privileges of common stockholders
Larry Nelson holds shares of General Electric GE common stock. As a stockholder, he has the right to be involved in the election of its
directors, who are responsible for managing the company and achieving the company's objectives.
True or False: The preemptive right allows Larry to purchase any additional shares sold by the company. This right will protect Larry from dilution in
the value of the stocks he holds.
True
False
Larry also holds shares of common stock in a company that only has shares outstanding. The company's stock currently is valued at
$ per share. The company needs to raise new capital to invest in production. The company is looking to issue new shares at a price of
$ per share. Larry worries about the value of his investment.
Larry's current investment in the company is
investment will be worth
If the company issues new shares and Larry makes no additional purchase, Larry's
Larry could be protected if the firm's corporate charter includes a
provision.
If Larry exercises the provisions in the corporate charter to protect his stake, his investment value in the firm will become
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