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In order to raise share capital, ABC Ltd., is issuing shares and giving privilege to the existing shareholders to subscribe to the new issue of shares according to the terms of conditions of the company. Identify the method of floatation used by the company.

Solution

Correct Option: 3

A rights issue is a privilege given to existing shareholders to subscribe to new shares of the company, usually in proportion to their existing holdings, before the shares are offered to the public.

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