Which of the Following Statements Is CORRECT

Multiple Choice

Which of the following statements is CORRECT?

A) The preemptive right gives stockholders the right to approve or disapprove of a merger between their company and some other company.
B) The preemptive right is a provision in the corporate charter that gives common stockholders the right to purchase (on a pro rata basis) new issues of the firm's common stock.
C) The stock valuation model, P₀ = D₁/(r_s − g) , cannot be used for firms that have negative growth rates.
D) The stock valuation model, P₀ = D₁/(r_s − g) , can be used only for firms whose growth rates exceed their required returns.
E) If a company has two classes of common stock, Class A and Class B, the stocks may pay different dividends, but under all state charters the two classes must have the same voting rights.