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      Question

      When an existing company issues fresh shares, the

      existing shareholders get the priority to subscribe to these additional new shares, such shares are called?
      A Right shares Correct Answer Incorrect Answer
      B Preference shares Correct Answer Incorrect Answer
      C Equity shares Correct Answer Incorrect Answer
      D Bonus shares Correct Answer Incorrect Answer
      E None of the above Correct Answer Incorrect Answer

      Solution

      A rights issue is an offer to the existing shareholders to purchase additional shares of the company at a discounted price. The rights issue is made in proportion to the existing holdings and is required to be subscribed within a specific period failing which the rights lapse.

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