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WAEC Commerce 1995 Question 4

Question 4

Business Finance

When a company sells shares to existing shareholders at preferential rate, that is called

  1. A.Rights issue
  2. B.Bonus issue
  3. C.Private placing
  4. D.Sale by auction
  5. E.Issue by prospectus
Show the answer and explanation

Answer: A (Rights issue)

Explanation

A rights issue offers new shares to existing shareholders, usually below market price.