Stock Rights Issue



Next video:
Loading the player...

Rights are offers that allow existing stockholders to buy additional shares at a predetermined price, for a set time period. Shareholders do not have to exercise these rights. They could let them expire. Alternatively, they could be traded in the open market
 
Why do companies offer rights? Sometimes tapping existing shareholders may be the best way to raise additional capital if they have difficulty attracting outside investors. For this reason, heavily indebted businesses will sometimes use a rights issue to pay down their obligations.
 

You May Also Like

Related Articles
  1. Stock Analysis

    Celgene's $1 Billion Deal to Fight Cancer

  2. Stock Analysis

    The Fall of the Chinese Stock Exchange and its Impact on Alibaba, Youku Tudou, and ...

  3. Stock Analysis

    Obamacare Affirmed - What's the Investing Impact?

  4. Stock Analysis

    Sarepta Therapeutics One Step Closer to Drug Approval

  5. Stock Analysis

    Lions Gate to Bring Iconic Game to the Big Screen

  6. Stock Analysis

    Intel Looks Ahead, Shakes Up Management Team

  7. Stock Analysis

    Sprint Becomes a Major U.S. Retailer

Trading Center
×

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!