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Hi sir,
I’m so confused by the answer of question 13.2 on BPP Kit. I understand that when a company issue right shares, the assets are increased. But why the 4th statement(Investments are increased) is wrong? I thought it could also increase investment..Could you please kindly explain? Thank u sooo much!!
Whether or not there is extra investment depends on what they do with the cash. The rights issue generates more cash (and therefore increased assets) but they do not have to invest the cash in new investments.
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