**Stockholder Rights and Investment Concerns**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 control in the company.- O True- O FalseLarry 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 $43.00 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 $34.40 per share. Larry worries about the value of his investment.Larry’s current investment in the company is **$86,000**. If the company issues new shares and Larry makes no additional purchase, Larry’s investment will be worth __________.This scenario is an example of **dilution**. Larry could be protected if the firm’s corporate charter includes a **preemptive right** provision.If Larry exercises the provisions in the corporate charter to protect his stake, his investment value in the firm will become __________.

Existing share= 20,000Number of shares Larry has 2,000Current price= $43'Issue price= $34.40Number…

Answered: Larry Nelson holds 1,000 shares of…

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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