It is often said that the primary purpose of the preemptive right is to allow individuals to
Question:
a. How important do you suppose this consideration is for the average stockholder of a firm whose shares are traded on the New York Stock Exchange?
b. Is the preemptive right likely to be of greater importance to stockholders of publicly owned or closely held firms? Explain
Step by Step Answer:
a The average investor in a listed firm is not really interested in maintain...View the full answer
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Stocks (also known as equities) are securities that represent ownership in a company. They are issued by companies to raise capital, and when an individual buys stocks, they become a shareholder in that company. Investing in stocks can be a way for individuals to potentially earn a return on their investment through dividends and capital appreciation. However, investing in stocks also carries a level of risk, as the value of the stock can fluctuate based on various factors such as the financial performance of the company and general market conditions. For companies, issuing stocks can be a way to raise funds for growth and expansion. When a company goes public by issuing an initial public offering (IPO), it can raise significant capital by selling ownership stakes to the public. Companies can also issue additional stock offerings to raise additional capital as needed.
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