NISM Certifications · NISM-Series-XV: Research Analyst · Introduction to Securities Market
A company with an existing listing offers new shares only to its existing shareholders in proportion to their holdings, usually at a price below the market price. This method of raising capital is called:
This is a rights issue. The listed company issues fresh shares to existing shareholders in proportion to their holdings, often at a discount to market price. A QIP targets institutions, an IPO is a first-time public offer, and an offer for sale involves existing shares being sold.
- ARights issueCorrect
- BQualified institutional placement
- CInitial public offer
- DOffer for sale
Explanation
A rights issue offers new shares to existing shareholders in proportion to their holdings. A QIP is directed at qualified institutional buyers, an IPO is a first public offering by an unlisted company, and an offer for sale involves existing shareholders selling their shares rather than the company issuing new ones.
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