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When an existing company offers its shares for sale to the existing shareholders, it is known as ___________.
Answer & Solution
Correct Answer:
Option
C
When an existing company offers its shares for sale to the existing shareholders, it is known as rights issue. A rights issue is a way by which a listed company can raise additional capital. However, instead of going to the public, the company gives its existing shareholders the right to subscribe to newly issued shares in proportion to their existing holdings.
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