The Subscription Rate of a New Offering Is Generally ________

question 67

Multiple Choice

The subscription rate of a new offering is generally ________ than the rights-on price and ________ than the ex-rights price.

• A) higher; higher
• B) higher; lower
• C) lower; higher
• D) lower; lower

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Definitions:

Dividend Payout

The portion of a company's earnings paid to shareholders as dividends, often expressed as a percentage of the company's total earnings.

Call Option

A financial contract that gives the holder the right, but not the obligation, to buy a stock, bond, commodity, or other asset at a specified price within a specific time period.

Put Option

A financial contract that gives the holder the right, but not the obligation, to sell a specified amount of an underlying asset at a set price within a specified time.

Hedge Ratio

The ratio of the size of a position in a hedging instrument to the size of the position being hedged, intended to minimize risk.