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WAEC Commerce 2017 Question 10

Question 10

Stock Exchange

When a company sells shares to existing shareholders at preferential rates, this is

  1. A.rights issue.
  2. B.bonus issue.
  3. C.private placing.
  4. D.issue by introduction.
Show the answer and explanation

Answer: A (rights issue.)

Explanation

A rights issue offers existing shareholders new shares at a favourable price; bonus shares are given free.