To offer its shareholders a privilege to obtain its shares at a fixed price, which of the following does a corporate issue?

A corporation issues rights to provide its shareholders with the privilege to purchase additional shares at a predetermined price, typically within a specified time frame. This process allows existing shareholders to maintain their proportionate ownership in the company and is often offered during capital-raising efforts. The predetermined price is usually set at a discount to the current market price, encouraging shareholders to exercise their rights.

The rights offering is beneficial to shareholders because it gives them the opportunity to purchase more shares before those shares are offered to the public or to new investors, ensuring that their ownership stake and voting power is preserved. These rights are typically transferable, allowing shareholders to sell them if they choose not to exercise their option to buy additional shares.

Other options like options, warrants, and convertibles serve different purposes in the context of corporate financing and shareholder benefits. Options generally refer to contracts that allow holders to buy or sell an underlying asset at a specified price before a certain date but do not specifically relate to shareholders’ rights to purchase stock directly from the issuing company. Warrants are similar to rights but are issued by the company and usually have longer terms before expiration. Convertibles refer to a type of security that can be converted into another form of security, typically shares of stock, but they do not grant