The most important feature of the preemptive right is that the rights
A)may be sold for profit.
B)afford stockholders possible protection against dilution.
C)may be cumulatively voted.
D)are nontransferable.

Question

Quizplus · Accepted Answer

The preemptive right allows current stockholders to purchase additional shares before they are offered to the general public, which helps protect their ownership percentage and potential earnings. This can be important in preventing dilution of their shares and potential loss of voting power. The other options (A, C, and D) are not accurate, as preemptive rights cannot be sold for profit, may or may not be cumulatively voted depending on the company's bylaws, and are typically nontransferable unless specifically stated otherwise.

The Most Important Feature of the Preemptive Right Is That