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WAEC Commerce 1994 Question 36

Question 36

Stock Exchange

The raising of new capital by allowing existing shareholders the privilege to buy shares at preferential rate is called

  1. A.bonus issue
  2. B.private placing
  3. C.offer for sale
  4. D.rights issue
  5. E.issue by prospectus
Show the answer and explanation

Answer: D (rights issue)

Explanation

A rights issue offers new shares to existing shareholders, usually at a lower price.