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JAMB Commerce 1995 Question 16

Question 16

Business Finance

Rights issue means the

  1. A.issue of shares to directors of a company on favourable terms
  2. B.issue of shares by a company only to founders of the company
  3. C.right of shareholders to vote on any issue
  4. D.issue of shares to shareholders on favourable terms.
Show the answer and explanation

Answer: D (issue of shares to shareholders on favourable terms.)

Explanation

A rights issue offers new shares to existing shareholders, usually below market price, in proportion to their holdings.