Which of the following statements concerning common stock and the investment banking process is INCORRECT?
A) The preemptive right gives each existing common stockholder the right to purchase his or her proportionate share of a new stock issue.
B) If a firm sells 1,000,000 new shares of Class B stock, the transaction occurs in the primary market.
C) Listing a large firm's stock is often considered to be beneficial to stockholders because the increases in liquidity and reputation probably outweigh the additional costs to the firm.
D) Stockholders have the right to elect the firm's directors, who in turn select the officers who manage the business. If stockholders are dissatisfied with management's performance, an outside group may ask the stockholders to vote for it in an effort to take control of the business. This action is called a tender offer.

Question

Quizplus · Accepted Answer

A tender offer is not the correct term for when an outside group seeks to gain control by asking stockholders to vote for them; this is actually known as a proxy fight. A tender offer involves buying shares directly from shareholders.

Which of the Following Statements Concerning Common Stock and the Investment