Discuss Forum
1.
To whom the right shares are issud?
- A. Potential shareholders
- B. Potential shareholders
- C. Potential shareholders
- D. Potential shareholders
Answer: Option C
Explanation:
Right shares are issued to the company's existing shareholders. They are given the right to purchase new shares, often at a discounted price, before they are offered to the public.
- Right to buy: The company provides its current shareholders with the option to buy new shares.
- Discounted price: These new shares are typically offered at a discount to the current market price to encourage existing investors to participate.
- Not mandatory: Shareholders are not obligated to purchase the new shares; they have the right to do so, but can choose to let the rights expire.
- Reason for issue: Companies issue rights to raise capital for expansion, debt reduction, or to fund other corporate activities
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