CUET Preparation Today
Assertion: Rights issues is a method of raising additional finance from existing shareholders by offering securities to them on a pro-rata basis. |
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 |
A is true but R is false |
Rights issue is a method of raising additional finance from existing shareholders by offering securities to them on pro-rata basis i.e. giving them a right to a certain number of shares in proportion to the shares they are holding. Normally, through a circular, rights issues are proposed to the existing shareholders and in case they are not willing to subscribe, they can renounce the same in favour of another person. This method of issuing securities is considered to be inexpensive as it does not require any brokers, agents, underwriters, prospectus or enlistment, etc. |
