The price of a share can change following a rights issue.Why?
A)The value of new cash raised through the rights issue is spread across a greater number of shares.
B)The value of new cash raised through the rights issue is spread across a fewer shares.
C)The increased value of the company following the rights issue is passed on to share holders.
D)The increased number of share holders after the rights issue increases the value per share.

Question

Quizplus · Accepted Answer

The value of new cash raised through a rights issue is indeed spread across a greater number of shares, which can dilute the value of existing shares, potentially changing the share price.

The Price of a Share Can Change Following a Rights