If a shareholder or an investor wants to acquire a new share of stock under a rights issue, he or she must
A)buy call options on the stock.
B)acquire the appropriate number of rights per share and subscription price per share and submit them to the subscription agent.
C)acquire the correct number of rights per share and submit them to the subscription agent.
D)register his or her order with the NYSE.

Question

Quizplus · Accepted Answer

In a rights issue, existing shareholders are given the opportunity to purchase new shares at a discounted price through the use of rights. Therefore, to acquire a new share of stock under a rights issue, a shareholder or investor must acquire the appropriate number of rights per share and submit them to the subscription agent along with the subscription price per share. This process is known as exercising rights. Buying call options or registering an order with the NYSE are not applicable in this context.

If a Shareholder or an Investor Wants to Acquire a New