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    Question

    When an existing company issues fresh shares, the

    existing shareholders get the priority to subscribe to these additional new shares, such shares are called?
    A Right shares Correct Answer Incorrect Answer
    B Preference shares Correct Answer Incorrect Answer
    C Equity shares Correct Answer Incorrect Answer
    D Bonus shares Correct Answer Incorrect Answer
    E None of the above Correct Answer Incorrect Answer

    Solution

    A rights issue is an offer to the existing shareholders to purchase additional shares of the company at a discounted price. The rights issue is made in proportion to the existing holdings and is required to be subscribed within a specific period failing which the rights lapse.

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