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Why are rights issues usually made at a discount? From the perspective of the business, how critical is the pricing of a rights issue likely to be?
In order to encourage shareholders to buy the new shares.
If they are not offered at a price lower than the current price on the stock exchange then people might as well just buy existing shares on the stock exchange if they want them.
However this is more relevant for Paper F9. In F3 you are expected to know the accounting entries for rights issues, but the determination of the issue price is not really relevant.
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