An equity issue sold to the firm's existing stockholders is called a
A)rights offer.
B)general cash offer.
C)private placement.
D)discriminatory-price auction.

Question

Quizplus · Accepted Answer

A rights offer is an offering of new shares issued to existing stockholders in proportion to their current ownership. This allows existing stockholders to maintain their ownership percentage in the company and is known as a preemptive right. The other options, general cash offer, private placement, and discriminatory-price auction, do not involve an offering to existing stockholders.

An Equity Issue Sold to the Firm's Existing Stockholders Is