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WAEC Commerce 2011 Question 42

Question 42

Stock Exchange

'Rights issue' is the

  1. A.individual's right to be issued shares on subscription.
  2. B.right of shareholders to vote on issues.
  3. C.preferential right to returns on shares.
  4. D.shares offered to existing shareholders at a cheaper price.
Show the answer and explanation

Answer: D (shares offered to existing shareholders at a cheaper price.)

Explanation

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