The selling of new shares to existing shareholders is referred to as

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POST UTME OAU

The selling of new shares to existing shareholders is referred to as

  • A) Public issue
  • B) Offer for sale
  • C) Rights issue
  • D) Bonus issue

Correct Answer: C) Rights issue

Explanation

A rights issue is when a company offers its existing shareholders the opportunity to buy additional shares at a discounted price. This is done to raise additional capital for the company. By offering the shares to existing shareholders first, it gives them the right to maintain their ownership stake in the company and also provides them with an opportunity to potentially increase their investment.

Public issue, on the other hand, refers to the sale of shares to the general public through an initial public offering (IPO) or a follow-on public offering (FPO).

An offer for sale is when existing shareholders sell their shares to the public through a stock exchange.

A bonus issue is when a company distributes additional shares to its existing shareholders as a reward or bonus.

In summary, the correct answer to the question is Option C: Rights issue, which is the selling of new shares to existing shareholders at a discounted price.



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