The raising of new capital by allowing existing shareholders the privilege to buy shares at preferential rate is called?

Assessment: WAEC SSCE - Commerce - 1994 (Objective) Subject: Commerce

Question 1 Report

The raising of new capital by allowing existing shareholders the privilege to buy shares at preferential rate is called?
Answer Details
The raising of new capital by allowing existing shareholders the privilege to buy shares at a preferential rate is called a "rights issue". This means that the existing shareholders have the right to buy a specific number of new shares at a discounted price before they are offered to the general public. This helps the company to raise new capital and also provides an opportunity for the existing shareholders to increase their ownership in the company at a lower cost.
Read lesson note on Financing Business (JAMB)
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