Which of the statements below is FALSE? A preemptive right is never particularly valuable to shareholders with
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Question:
Which of the statements below is FALSE?
A preemptive right is never particularly valuable to shareholders with large ownership percentages. | ||
If an investor purchases 20% of the initial issue of the company, the investor then owns 20% of the company, given the one vote-one share norm. | ||
After an initial offering, the company can sell more shares to the public at a later date. If the investor who originally purchased 20% does not purchase 20% of the subsequent issue, his or her ownership is diluted below 20%. | ||
A preemptive right enables one to maintain one's proportional level of ownership. |
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