A public offering of securities where existing shareholders of the ﬁrm have the ﬁrst opportunity to buy the new securities is called a _____ offering.

Question

Quizplus · Accepted Answer

A rights offering is a public offering of securities where existing shareholders of the firm have the first opportunity to buy the new securities. This is different from a general cash offering where the securities are available to the general public, and from a best efforts or firm commitment offering where underwriters are involved in selling the securities. A red herring is a preliminary prospectus and not a type of offering.

A Public Offering of Securities Where Existing Shareholders of the ﬁRm