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Alberto currently owns 2,500 shares of Southern Tools. He has just been notified that the company is issuing additional shares and he is being given a chance to purchase some of these shares prior to the shares being offered to the general public. What is this type of an offer called?(A) best efforts offered(B) rights offer(C) general cash(D) firm commitment offer(E) priority offer

Respuesta :

Answer:

(B) rights offer

Explanation:

Right offer is an offer made by the company to issue additional capital, but even in this case the company does not take help of public, but rather issues shares to the original shareholders.

In the given case Alberto already holds 2,500 shares and thereafter further he is issued shares, rather than issuing to general public as because he already had shares.

Therefore issue of shares to Alberto will be treated as right offer.

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