SIE Understanding Products and Their Risks Practice Question 39

Question: 39

Which may typically occur with a rights issue?

Correct Answer: C

Explanation:

C: Choice C is correct because a company may issue a right with a fractional ability to purchase a share of common stock. Choice A is incorrect because the subscription price will typically be lower than the current market price. Choice B is incorrect because the market price will typically fall when a rights offering is announced, as future dividends will be distributed among a larger quantity of common shares—unless the future profits are expected to soon increase proportionate to the increase in outstanding shares. Choice D is incorrect because non-renounceable rights may be exercised, or not used, as they cannot be sold.

All content of site and practice tests © 2022 Jack.
Quick View

FINRA Practice Tests