Which of the Following Statements Is FALSE

question 9

Multiple Choice

Which of the following statements is FALSE?

• A)In a rights offer,the firm offers the new shares only to existing shareholders.
• B)Secondary shares are shares sold by existing shareholders,including the company's founder.
• C)If a firm's management is concerned that its equity may be underpriced in the market,by using a rights offering the firm can continue to issue equity without imposing a loss on its current shareholders.
• D)In the United States,most offers are rights offers.

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Definitions:

Units

Basic measures or quantities, such as length, mass, time, etc., that serve as standards for expressing and comparing quantities.

Average Total Cost

The total cost of production (fixed and variable costs combined) divided by the number of units produced.

Units

Basic quantities or measures adopted by convention or by law, used as a standard to express physical quantities.

Diminishing Returns

An economic principle where the addition of a variable factor to a fixed factor leads to a decrease in the marginal output of the variable factor beyond a certain point.