n NISM Certifications
XV NISM Series XV
Medium

In which scenario would a company most likely issue a rights issue?

Practice question from NISM XV Mock Test 5 — bank. The correct answer is highlighted below with a full explanation.

Options

  1. A

    To repay long-term loans

  2. B

    To distribute bonus shares

  3. To raise additional equity from existing shareholders

    Correct answer

  4. D

    To pay dividends

Why this is the answer

A rights issue offers existing shareholders the chance to buy additional shares, typically at a discounted price, to raise equity capital. It is not meant for dividend payment or distributing bonus shares.

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