Question

Maureen owns 20% of the common stock of the Queen Bean Corporation. The company announced plans to offer an additional 10,000 shares of common stock for sale.

If Maureen exercises her preemptive rights, Queen Bean must offer her the opportunity to purchase:

a) 8,000 shares.
b) 2,000 shares.
c) as many of the new shares as the investor is willing and able to buy.
d) 20% of the outstanding preferred stock.

Answer 1

(B) 2,000 shares

Step-by-step explanation:

As an existing shareholder, Maureen has the preemptive right of buying the number of shares corresponding to her shareholding interest in a share issuance.

This translates to (20% * 10,000 =) 2,000 new shares in the share sales.