Asked by
Welton Spottsville
on Nov 07, 2024
Verified
As an existing shareholder you have the right to participate in a privileged subscription. This gives you the ability to do each of the following EXCEPT:
A) Maintain your percentage ownership in the firm.
B) Sell some of your rights to another party.
C) Receive the rights even after you have sold the stock, provided you sell before the holder-of-record date.
D) Exercise your rights and then sell the new stock you just acquired.
E) Incur a loss of wealth if you let your rights expire unexercised.
Privileged Subscription
An offer to existing shareholders to purchase additional shares in a company before the new shares are offered to the public.
Holder-Of-Record Date
The specific cutoff date established by a corporation by which one must be on the company's books as a shareholder to receive a dividend or other distribution.
Percentage Ownership
The fraction of a company's shares owned by an individual or entity, expressed as a percentage of the total shares outstanding.
- Characterize the theory of rights offerings and the mechanism for existing equity holders to retain their proportional stake.
Verified Answer
CT
Learning Objectives
- Characterize the theory of rights offerings and the mechanism for existing equity holders to retain their proportional stake.