Currently, you own 1.2 percent of the outstanding shares of Home Security.The firm has decided to issue additional shares of stock and has given you the first option to purchase 1.2 percent of those additional shares.What type of offer is this?

Question

Quizplus · Accepted Answer

A rights offer is a type of offer where existing shareholders have the first option to purchase additional shares in proportion to their current ownership percentage. In this scenario, Home Security has given the shareholder the option to purchase 1.2 percent of the additional shares, which is in line with their current ownership percentage. Therefore, this is a rights offer.

Currently, You Own 1