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What is a rights issue?

  1. A An offer of new shares to existing shareholders, usually at a discount, in proportion to their holding
  2. B A bonus issue of free shares
  3. C A buyback of shares
  4. D A private placement to institutions
Answer

An offer of new shares to existing shareholders, usually at a discount, in proportion to their holding

It allows existing shareholders to avoid dilution, and the rights themselves are typically tradeable if they choose not to subscribe.

All Investment Banking MCQs

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