A publicly traded company gave its existing shareholders the opportunity to purchase from the new stocks that it will issue. The existing shareholders can purchase 3 new shares at a price of $10 per share for every 8 shares held. This is an example of:

Question

Quizplus · Accepted Answer

This is a rights offering, as existing shareholders are given the right to purchase additional shares at a discounted price. Private placement involves the sale of securities to a small group of private investors, shelf registration allows a company to register securities for sale without actually issuing them, an initial public offering involves the first time a company sells shares to the public, and a syndicate offering involves a group of underwriters working together to sell securities.

A Publicly Traded Company Gave Its Existing Shareholders the Opportunity