Economics · Economy
Analyze the structural differences between 'Rights Issues' and 'Bonus Issues' in the primary capital market based on the following statements: 1. A 'Rights Issue' invites existing shareholders to purchase additional new shares at a discount to raise fresh capital. 2. A 'Bonus Issue' involves free issuance of shares by capitalizing profits, resulting in no fresh cash inflow. 3. The 'Ex-Rights Price' is the theoretical market price after issuance, which is generally lower than the 'Cum-Rights Price'. 4. Shareholders can renounce their rights in a Rights Issue and sell them in the secondary market. 5. A 'Bonus Issue' is mandatory for all listed companies once Reserves and Surplus exceed five times paid-up capital. 6. The 'Record Date' is the cutoff date to determine eligibility for both issues. Evaluate the correctness of the statements:
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1Statements 1, 2, 3, 4, and 6 are correct; Statement 5 is incorrect.✓
- 2All statements from 1 to 6 are correct.
- 3Statements 1, 2, and 5 are correct; 3, 4, and 6 are incorrect.
- 4Only Statements 1 and 2 are correct.
Correct answer
Statements 1, 2, 3, 4, and 6 are correct; Statement 5 is incorrect.
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