Which One of These Conditions Must Exist If a Rights

question 43

Multiple Choice

Which one of these conditions must exist if a rights offering is to be successful?

• A)The rights cannot be resold.
• B)The book value per share must be less than the subscription price.
• C)Shareholders must be able to obtain one new share for every right they receive.
• D)The issuer must guarantee to repurchase the rights at the offer price if the market price declines.
• E)The subscription price must be less than the market price.

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Definitions:

Construction Loan

A short-term loan used to finance the building of a home or another real estate project, with the property under construction serving as collateral.

Capitalization Of Interest

The process of adding accumulated interest to the principal balance of a loan, increasing the total amount owed.

Avoidable Interest

Interest cost on funds expended on a qualifying asset that could be avoided if the expenditure had not been made.

Economic Benefit

The gain received from a product or service, often measured in terms of increased utility or revenue, minus associated costs.