f/servlet/quiz?quiz action-takeQuiz&quiz; probGuid-QNAPCOA8010100000041ebc560040
ID: 2621113 • Letter: F
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f/servlet/quiz?quiz action-takeQuiz&quiz; probGuid-QNAPCOA8010100000041ebc5600400008&ctx-ream-00578ck-m; 153 Graded Assignment | Read Chapter 9| Back to Assignment Due Monday 07.09.18 at 11:45 PM Attempts: Keep the Highest: 16 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 his preemptive right True O False 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 valued at $50.00 per share. The company needs to raise new capital to invest in production. The company is looking to issue 5,000 new shares at a price of $40.00 per share. Larry worries about the value of his investment If the company issues new shares and Larry makes no Larry's current investment in the company is additional purchase, Larry's investment will be worth This scenario is an example of Larry could be protected if the firm's corporate charter includes a provision f Larry exercises the provisions in the corporate charter to protect his stake, his investment value in the firm will become Flash Player WIN 300,0,11 Q 3.34.1 C 2004-2016 Aplia. A8 nghtsreserved. Grade t Now 2013 Cengage Learning except as noted. AD All rights F10 F11 F12 Pr F8 F9 F4 F5 F6 F7 O: F3Explanation / Answer
1) True
2) Larry has 2000 shares out of 20,000 shares which are 10%. valued at 2000*50= 100,000
Current investment = $ 100,000
Now larry does not invest further new issue is at 5000*40= 200,000
Total company shares = 50*20000= 1,000,000, new issue worth= 200,000
New share price= 1,200,000/25000= $48
Larry investment worth= $48*2000= $96000
This scenario is example of "Dilution"
Corporate charter has "Pre-emptive rights"
Larry has 10% stake, for non dilution he can buy 500 shares at 40/share,
Old investment=100,000 new investment for 10% stake is 40*500=20000
Total investment in company is 120,000
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