Homework Answers
A preemptive right is a right in which the shareholder could able to maintain his ownership with respect to additional issuance of the stock made to new investors
Due to the preemptive right, the ownership of the Larry shares should not be diluted and he has an interest in buying new shares and at the same time he stops the new investors from purchasing the new shares but in the case when he does not utilize his right so it reduced the interest and that would become equivalent for the new investors
Hence, The given statement is true
The current investment for the company is
= Number of shares * current stock price
= 2,000 shares * $47 per share
= $94,000
In case when no additional purchase is made
So, the value of the investment is
= (Number of shares * current stock price + Number of new shares * new stock price) / (number of shares + number of new shares) * holding shares
= (2,000 shares * $47 per share + 5,000 shares * $37.60)/(2,000 shares + 5,000 shares) * 2,000 shares
= ($94,000 + $188,000) / (7,000 shares) * 2,000 shares
= $80,571.43
This is an example of dilution as when a firm issue more and more shares so the number of outstanding shares rises while at the same time the existing shareholder has less or diluted percentage in the firm
Now to protect Larry, the preemptive right would be applied which is explained above also in this the first priority is given to these investors before offering to the general public. it can be done by signing a contract with the company
After exercising the provision, the investment value is
= (Number of shares * current stock price + Number of new shares * new stock price * given percentage)
= (2,000 shares * $47 per share + 5,000 shares * $37.60 * 2,000 shares / 20,000 shares or 10%)
= $94,000 + $18,800
= $112,800
Add Answer to:
Larry Nelson holds 1,000 shares of General Electric (GE) common stock. As a stockholder, he has...
1. Rights and privileges of common stockholders Larry Nelson holds 1,000 shares of General Electric (GE)...
1. Rights and privileges of common stockholders Larry Nelson holds 1,000 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: Larry will receive dividends together with preferred stockholders. O True False Larry also holds 2,000 shares of common stock in a company that only has 20,000 shares outstanding. The company's stock...
Larry Nelson holds 1,000 shares of General Electric's (GE) common stock. The annual stockholder meeting is...
Larry Nelson holds 1,000 shares of General Electric's (GE) common stock. The annual stockholder meeting is being held soon, but as a minor shareholder, Larry doesn't plan to attend. Larry did not sell his shares but gave his voting rights to the management group running General Electric (GE). Larry must have signed a gives the management group control over his shares. that Larry also holds 2,000 shares of common stock in a company that only has 20,000 shares outstanding. The...
Rights and privileges of common stockholders Larry Nelson holds 1,000 shares of General Electric (GE) common...
Rights and privileges of common stockholders Larry Nelson holds 1,000 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: Larry will receive dividends together with preferred stockholders. False True Larry also holds 2,000 shares of common stock in a company that only has 20,000 shares outstanding. The company’s stock currently is...
1. Rights and privileges of common stockholders Larry Nelson holds 1,000 shares of General Electric (GE)...
1. Rights and privileges of common stockholders Larry Nelson holds 1,000 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: Larry can invest in another company that is selling class A stocks to the public, and class B shares will be retained by company insiders. This will help the founders maintain...
1. Rights and privileges of common stockholders Larry Nelson holds 1,000 shares of General Electric's (GE)...
1. Rights and privileges of common stockholders Larry Nelson holds 1,000 shares of General Electric's (GE) common stock. The annual stockholder meeting is being held soon, but as a minor shareholder, Larry doesn't plan to attend. Larry did not sell his shares but gave his voting rights to the management group running General Electric (GE). Larry must have signed a that gives the management group control over his shares. Larry also holds 2,000 shares of common stock in a company...
Options for blanks 1. a) proxy b) preemptive right c)corporate charter d)poison pill 2. a)37600 b)56400...
Options for blanks
1. a) proxy b) preemptive right c)corporate charter d)poison
pill
2. a)37600 b)56400 c)94000 d)103,400
3. a)90240 b)135360 c)225600 d)94000
4. a)dilution b)a poison pill c)a proxy d)a takeover
5. a)proxy b)preemptive right
6. a)113800 b)84600 c)169200 d)112800
1. Rights and privileges of common stockholders Aa Aa E that Larry Nelson holds 1,000 shares of General Electric's (GE) common stock. The annual stockholder meeting is being held soon, but as a minor shareholder, Larry doesn't plan to...
please complete all parts to the problem. added extra pictures of answer choices to choose from...
please complete all parts to the problem. added extra pictures
of answer choices to choose from so its easier.
1. Rights and privileges of common stockholders Larry Nelson holds 1,000 shares of General Electric's (GE) common stock. The annual stockholder meeting is being held soon, but as a minor shareholder, Larry doesn't plan to attend. Larry did not sell his shares but gave his voting rights to the management group running General Electric (GE). Larry must have signed a that...
1. Rights and privileges of common stockholders Larry Nelson holds 1,000 shares of General Electric (GE)...
1. Rights and privileges of common stockholders Larry Nelson holds 1,000 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: Larry can vote in person at the company's annual meeting, through the mail, or by transferring the right to vote to another person by means of transfer of ownership of shares....
RR Inc. has 5,000,000 shares of common stock outstanding, of which you own 125,000. Management decides...
RR Inc. has 5,000,000 shares of common stock outstanding, of which you own 125,000. Management decides to sell an additional 1,000,000 shares. The provision in the corporate charter that gives you the right to purchase your pro rata share of the new offering is known as a/an right. calling dilutive preemptive voting
Suppose you own 64.000 shares of common stock in a firm with 3.2 milion total shares...
Suppose you own 64.000 shares of common stock in a firm with 3.2 milion total shares outstanding. The firm announces a plan to sell an additional 16 million shares through a rights offering, The market value of the stock is $33 before the rights offering and the new shares are being offered to existing shareholders at a $3 discount a. If you exercise your preemptive rights, how many of the new shares can you purchase? b. What is the market...
1. Rights and privileges of common stockholders Larry Nelson holds 1,000 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: Larry will receive dividends together with preferred stockholders. O True False Larry also holds 2,000 shares of common stock in a company that only has 20,000 shares outstanding. The company's stock...
Larry Nelson holds 1,000 shares of General Electric's (GE) common stock. The annual stockholder meeting is being held soon, but as a minor shareholder, Larry doesn't plan to attend. Larry did not sell his shares but gave his voting rights to the management group running General Electric (GE). Larry must have signed a gives the management group control over his shares. that Larry also holds 2,000 shares of common stock in a company that only has 20,000 shares outstanding. The...
1. Rights and privileges of common stockholders Larry Nelson holds 1,000 shares of General Electric's (GE) common stock. The annual stockholder meeting is being held soon, but as a minor shareholder, Larry doesn't plan to attend. Larry did not sell his shares but gave his voting rights to the management group running General Electric (GE). Larry must have signed a that gives the management group control over his shares. Larry also holds 2,000 shares of common stock in a company...
Options for blanks
1. a) proxy b) preemptive right c)corporate charter d)poison
pill
2. a)37600 b)56400 c)94000 d)103,400
3. a)90240 b)135360 c)225600 d)94000
4. a)dilution b)a poison pill c)a proxy d)a takeover
5. a)proxy b)preemptive right
6. a)113800 b)84600 c)169200 d)112800
1. Rights and privileges of common stockholders Aa Aa E that Larry Nelson holds 1,000 shares of General Electric's (GE) common stock. The annual stockholder meeting is being held soon, but as a minor shareholder, Larry doesn't plan to...
please complete all parts to the problem. added extra pictures
of answer choices to choose from so its easier.
1. Rights and privileges of common stockholders Larry Nelson holds 1,000 shares of General Electric's (GE) common stock. The annual stockholder meeting is being held soon, but as a minor shareholder, Larry doesn't plan to attend. Larry did not sell his shares but gave his voting rights to the management group running General Electric (GE). Larry must have signed a that...
1. Rights and privileges of common stockholders Larry Nelson holds 1,000 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: Larry can vote in person at the company's annual meeting, through the mail, or by transferring the right to vote to another person by means of transfer of ownership of shares....
RR Inc. has 5,000,000 shares of common stock outstanding, of which you own 125,000. Management decides to sell an additional 1,000,000 shares. The provision in the corporate charter that gives you the right to purchase your pro rata share of the new offering is known as a/an right. calling dilutive preemptive voting
Suppose you own 64.000 shares of common stock in a firm with 3.2 milion total shares outstanding. The firm announces a plan to sell an additional 16 million shares through a rights offering, The market value of the stock is $33 before the rights offering and the new shares are being offered to existing shareholders at a $3 discount a. If you exercise your preemptive rights, how many of the new shares can you purchase? b. What is the market...
Most questions answered within 3 hours.
-
a student was diagnosed with myopia (nearshightedness). He can
comfortably read a newspaper when it is...
asked 44 seconds ago -
What is the significance of the constraints in a physical model?
What part do distinct constraints...
asked 20 minutes ago -
Consider a 3m x 3m window in a house. The thermal conductivity
is reported to be...
asked 37 minutes ago -
Why has California been the favorite destination of large number
of secondary migrants?
asked 1 hour ago -
Do not neglect the old for the new. The existing business must
not lose priority simply...
asked 4 hours ago -
Kylie is a single mom with two dependent children,
Tanner, age 7 and Olivia, age 11....
asked 5 hours ago -
Phosphorous + bromine = phosphorous tribromide. If 35.0 g of
bromine are reacted and 27.9 grams...
asked 6 hours ago -
Derive the long wavelength limit of the Planck energy density
distribution
asked 6 hours ago -
Calculate the pH of each of the following solutions.
0.50 M HBr
3.1×10−4 M KOH
4.2×10−5...
asked 10 hours ago -
For the year ended December 31, Depot Max’s cost of merchandise
sold was $85,600. Inventory at the...
asked 10 hours ago -
Week 10 - Professional Memo Assignment
Professional Memo Assignment
Your mission for this week, should you...
asked 10 hours ago -
Write a Python program that stores the data for each
player on the team, and it...
asked 10 hours ago