What Are the Advantages of a Rights Offer Over a Cash

question 88

Multiple Choice

What are the advantages of a rights offer over a cash offer when issuing new shares?

• A)It enables a firm to attract new investors from outside its current owners.
• B)It enables a firm to issue equity without imposing a loss on current shareholders.
• C)It enables a firm to access new sources of capital to fund its growth.
• D)It enables a firm to attract new investors by offering them a windfall from the difference between the price of the issued stock and the price of stock after the offering.
• E)It enables a firm to issue equity at a price above the market price of its stock.

---

Definitions:

Financial Reporting

The process of producing statements that disclose an organization's financial status to management, investors, and the government.

Confirmatory Value

The usefulness of financial information in confirming or correcting prior expectations.

Financial Reporting

The process of producing statements that disclose an organization's financial status to management, investors, and government bodies.

Revenue Agency

This is a government body responsible for the administration of tax laws and the collection of taxes and other revenue.