What is a rights issue?
A)An offer to existing shareholders giving them the right to purchase new shares in the company in proportion to the number of shares held
B)An offer to existing shareholders giving them the right to purchase an unlimited number of new shares in the company at a discount to the current market price
C)An offer to existing shareholders giving them the right to purchase an unlimited number of new shares in the company at a premium to the current market price
D)An offer to existing shareholders giving them the right to sell their existing shares back to the company at a premium to the current market price

Question

Quizplus · Accepted Answer

A rights issue is an offer made by a company to its existing shareholders, giving them the right to buy new shares in the company in proportion to the number of shares they already hold. This means that shareholders have the option but not the obligation to purchase the new shares, and their ownership percentage in the company will remain the same if they choose not to participate.

What Is a Rights Issue