Question
Question 14 Which of the following statements) is/are true? (Select the correct option from below the following statements) (i) Rights issues requires the managers to offer new shares to existing shareholders before offering the same to the members of the public (ii) Rights issues are normally issued at a premium (iii) Rights issues are normally issued at a discount a) (i) only b) (ii) only c) (i) and (ii) d) (i) and (iii) (i) and Gin (i) only (ii) only (i) and (ii) 4 p
Answer
4.4
(278 Votes)
Zane
Professional · Tutor for 6 years
Answer
d) (i) and (iii)
Explanation
Statement (i) "Rights issues requires the managers to offer new shares to existing shareholders before offering the same to the members of the public" - This is a true statement. Management must offer new company shares first to current shareholders before selling them to the public through a rights issue.Statement (ii) "Rights issues are normally issued at a premium" - This statement is false. Rights issues are not normally issued at a premium. Instead, they are typically issued at a discount to incentivize current shareholders to buy more shares in order to maintain their percentage of ownership when new shares are issued.Statement (iii) "Rights issues are normally issued at a discount" - This is a true statement. As noted earlier, rights issues are typically offered at a discount in order to encourage current shareholders to exercise their right of first refusal.In conclusion, only statement (i) and (iii) are true hence the correct selection is Option D (i) and (iii).