The effect of a rights offering on a stockholder is
A)to increase his/her wealth.
B)to increase his/her wealth only if the new stock is purchased.
C)to decrease his/her wealth unless the stock is purchased.
D)to decrease his/her wealth if nothing is done.

Question

Quizplus · Accepted Answer

A rights offering gives existing shareholders the right to buy additional shares at a discount. If the shareholder does not exercise their rights, their ownership stake in the company will be diluted, decreasing their wealth.

The Effect of a Rights Offering on a Stockholder Is