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Finance Dictionary and Glossary of Investment Terms
Issuance to shareholders that allows them to purchase additional shares, usually at a discount to market price. Holdings of shareholders who do not exercise rights are usually diluted by the offering. Rights are often transferable, allowing the holder to sell them on the open market to others who may wish to exercise them. Rights offerings are particularly common to closed-end funds, which cannot otherwise issue additional common stock.
Offering of common stock to investors who currently hold shares which entitle them to buy subsequent issues at a discount from the offering price.