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When a rights offering is announced:

Looking for the answer to the question below related to Financial Management?

When a rights offering is announced:

 Options:

A. common shareholders may purchase one new share for each share owned
B. a stock will initially trade rights-on
C. the share price increases when the stock goes ex-rights
D. the shareholder increases the value of his holdings by exercising the rights

 

The Correct Answer Is:

  • B. a stock will initially trade rights-on

 

Conclusion

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