Which One of the Following Statements Is Correct About a Rights

question 32

Multiple Choice

Which one of the following statements is correct about a rights offering?

• A) If the rights are selling at a price equal to their actual value, then a shareholder will neither win nor lose by selling their rights.
• B) If the market price of a right is less than the actual value of the right, then shareholders can gain by selling their rights in the open market.
• C) When the market price of a right is equal to the actual value of the right the shareholders will gain by exercising their rights.
• D) If the market price of a right is greater than the actual value of the right, then shareholders can gain by purchasing additional rights in the marketplace and exercising those rights.
• E) If both the market price of the right and the market price of the stock are underpriced compared to their ex-right values, then an investor is guaranteed a profit if they purchase additional rights.

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Definitions:

Operant Behavior

A type of learning where behavior is controlled by consequences, including rewards and punishments.

Daily Exercise

Regular physical activity performed on a daily basis to maintain or improve one's health and fitness.

Frequency Increase

An elevation in the rate or number of occurrences of a particular event or phenomenon within a specific time frame.

Partial Reinforcement

A conditioning principle where a behavior is reinforced only some of the time, leading to a slower acquisition of behavior but greater resistance to extinction.