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    Question

    _________ is a method to sell securities to the existing

    shareholders of a company.
    A Bonus issue Correct Answer Incorrect Answer
    B Rights issue Correct Answer Incorrect Answer
    C Initial public offerings/issues Correct Answer Incorrect Answer
    D Recapitalization Correct Answer Incorrect Answer

    Solution

    A rights issue is a way for a company to raise additional capital by offering its existing shareholders the right to buy additional shares at a discounted price. The shareholders are given a proportionate number of rights based on their existing shareholding, and they can choose to exercise these rights by subscribing to the new shares. This allows existing shareholders to maintain their ownership percentage in the company by buying more shares at a lower price. Rights issues are one of the methods used by companies to raise funds without diluting the ownership of existing shareholders significantly.

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