Practicing Success

Target Exam

CUET

Subject

Business Studies

Chapter

Financial Markets

Question:
Assertion (A): Under private placement, the company offers the new shares to its existing shareholders in proportion of shares already held by them.
Reason (R): Private placement method helps to raise capital more quickly as compared to public issue.
Options:
Both A and R are true and R is the correct explanation of A
Both A and R are true but R is not the correct explanation of A
A is true but R is false
A is false but R is true
Correct Answer:
A is false but R is true
Explanation:
Under Rights issue the company offers the new shares to its existing shareholders in proportion of shares already held by them.