A possible advantage to a rights offering is that
A)current shareholders are protected against dilution.
B)the firm has a built-in market of knowledgeable investors.
C)distribution costs are lower than a public offering.
D)All of these options

Question

Quizplus · Accepted Answer

A rights offering has multiple advantages, including:
A) Current shareholders are protected against dilution because they have the right to purchase new shares in proportion to their current holdings.
B) The firm has a built-in market of knowledgeable investors who are already familiar with the company and its stock.
C) Distribution costs are lower than a public offering since the offering is only made to existing shareholders.
Therefore, all of the above options are advantages of a rights offering.

A Possible Advantage to a Rights Offering Is That