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Hello sir,
i would like to know, what are some of the factors to consider in deciding whether to use funds raised from a rights issue ti finance a business expansion?Many thanks.
Have you watched the free lectures and read the lecture notes? (because this is discussed).
The factors will include the following:
the signalling effect of having a rights issue
the fact that there will be no loss of control (if it is a small company)
the fact that the gearing will be reduced
the fact that shareholders have the choice as to whether or not to supply the funds
the amount of money that the company is trying to raiseApart from watching the lectures and reading the notes, the best is to learn from answers to similar questions in your Revision Kit.
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