Under a ______________, if any additional shares of common stock, or any security that may be converted into common stock, are to be issued, the securities must be offered for sale first to the existing common stockholders.
A) red herring
B) rights offering
C) seasoned offering
D) shelf registration

Question

Quizplus · Accepted Answer

This type of offering is known as a "rights offering" or "subscription offering," and it gives existing common stockholders the right to purchase additional shares before they are offered to the public. This ensures that current shareholders have the opportunity to maintain their proportional ownership in the company and also provides a source of funding for the company without diluting the ownership of existing shareholders.

Under a ______________, If Any Additional Shares of Common Stock