Roy owns 200 shares of R.T.F.,Inc.He has opted not to participate in the current rights offering by this firm.As a result,Roy will most likely be subject to:
A)an oversubscription cost.
B)underpricing.
C)dilution.
D)the Green Shoe provision.
E)a locked in period.

Question

Quizplus · Accepted Answer

Dilution occurs when a company issues new shares to raise capital, and existing shareholders' ownership percentage in the company decreases as a result. In this scenario, since Roy has not participated in the rights offering, he may face dilution as other shareholders purchase new shares at a discounted price, and the value of his 200 shares may decrease. The other options (A, B, D, and E) do not seem relevant to the given information.

Roy Owns 200 Shares of R