A company issued rights to its existing shareholders to acquire,at $15 per share,5,000 unissued shares of common stock with a par value of $10 per share.Common Stock will be credited at
A) $15 per share when the rights are exercised.
B) $15 per share when the rights are issued.
C) $10 per share when the rights are exercised.
D) $10 per share when the rights are issued.

Question

Quizplus · Accepted Answer

The par value of the common stock is $10 per share, which means the stock cannot be sold for less than this amount. Therefore, the common stock will be credited at $10 per share when the rights are exercised, not at the higher $15 per share price at which the rights were issued.

A Company Issued Rights to Its Existing Shareholders to Acquire,at