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Exam Series 7 topic 1 question 5 discussion

Actual exam question from FINRA's Series 7
Question #: 5
Topic #: 1
[All Series 7 Questions]

A corporation makes a rights offering to raise $10 million of new capital by issuing one million shares of common stock. If it already has six million shares outstanding at the time of the offering.
What subscription ratio is the corporation establishing for each new share?

  • A. 6 rights per share
  • B. 10 rights per share
  • C. 6 million rights per share
  • D. 10 million rights per share
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Suggested Answer: A 🗳️
6 rights per share. Each share receives a right and there are six million shares receiving rights to one million new shares. So six rights are required for one share.
by Bobasega at Feb. 7, 2023, 11:58 a.m.

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Bobasega
1 year, 2 months ago
sorry this was for previous question
upvoted 1 times
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Bobasega
1 year, 2 months ago
why not just ask how much the new offering shares will be without the misdirection? Clients will expect straight forward and or questions. This is not a pop quiz but serious training in the finance world.
upvoted 1 times
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