What Is the Primary Reason Why Securities Are Sometimes Offered

question 74

Multiple Choice

What is the primary reason why securities are sometimes offered through a rights offering?

• A)To avoid corporate taxation of excessive profits
• B)To provide additional income to the current shareholders
• C)To assist current shareholders in maintaining their current proportional ownership position
• D)To replace a regular stock dividend
• E)To allow shareholders to avoid taxes by purchasing shares directly from the issuer

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Definitions:

Balance Sheet

A financial statement showing a company's assets, liabilities, and equity at a specific point in time.

Chapter 7 Bankruptcy

A process under U.S. bankruptcy law for liquidating a debtor's assets to pay off creditors before the debtor is relieved of their debts.

Note Payable

A written promise to pay a specific amount of money, either on demand or at a set future date, typically used in business to document debt agreements.