Question

Mr. Sahil and Mr. Rajesh are promoting a new company. They are not able to decide on how to raise funds. Sahil is interested in a new issue through the prospectus, while Rajesh wants a rights issue. As a financial manager, suggest the appropriate step to Sahil and Rajesh.

• A. Offer through Prospectus
• B. Offer for Sale
• C. Private Placement
• D. Rights Issue

Answer 1

The correct option is A

Offer through Prospectus

The issue of shares through prospectus is appropriate, as suggested by Sahil, as a new company cannot issue rights shares because this can only be done by existing companies.