Discuss CIMA CIMAPRA19-F02-1 Exam Topic 1 Question 132

CIMAPRA19-F02-1 Exam - Topic 1 Question 132 Discussion

Posted by Elvera on Oct 02, 2026 at 04:41 AM

JK is seeking to raise new finance through a rights issue of equity shares.

Which THREE of the following statements are correct?

AThe administration costs associated with a rights issue are higher than those for an initial public offering.

BShareholders must pay the full market price forshares offered in a rights issue.

CAn alternative name for arights issue is a scrip issue of shares.

DA rights issue willdilute an existing shareholder's control of the entity if they do not take up their rights.

EEntities have the opportunity to underwrite a rights issue.

FShareholders' entitlement to rights may be sold on their behalf.

Suggested Answer: D, E, F

4 comments · newest first

Dierdre 39 minutes ago

I recall that underwriting is common in rights issues, so option E seems right, but I need to double-check that.

Lai 5 days ago

I’m uncertain about option C; I thought a scrip issue was different from a rights issue, but they might be related somehow.

Portia 10 days ago

I feel like option D is definitely correct because if shareholders don’t take up their rights, their ownership percentage would decrease.

Gilma 16 days ago

I think option A is tricky; I remember something about IPOs generally having higher costs, but I'm not entirely sure about rights issues.

Thread summary

● Consensus

Community pick: Yes strong agreement

Vote breakdown

A 3%

B 1%

C 1%

D 92%

E 98%

F 94%

Summary updated from 4 comments · last activity 39 minutes ago

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