If all shareholders take up a rights issue with a subscription price less than the share price,then there will be a net increase in wealth to all investors.

Question

Quizplus · Accepted Answer

A rights issue at a subscription price less than the share price does not create wealth; it merely redistributes existing shareholder value by issuing more shares at a discount, diluting the share price but not changing the overall market capitalization or wealth of the shareholders.

If All Shareholders Take Up a Rights Issue with a Subscription