Right

Privilege granted shareholders of a corporation to subscribe to shares of a new issue of common stock before it is offered to the public. Such a right, which normally has a life of two to four weeks, is freely transferable and entitles the holder to buy the new common stock below the public offering price. See: Warrant.

Rights Offering

In stock, the ability of a shareholder to maintain the same percentage of ownership in a company should the company issue more stock by buying a proportional number of shares at or below the market price. This protects the investor from devaluation of his/her shares if the company decides to hold a round of financing. The purchase of this proportional number of shares usually takes place before the new issue is offered to the secondary market, and must be exercised before a certain date (known as the expiration date) if the shareholder is to maintain the same percentage of ownership. Rights offerings or issues are also called subscription rights or simply rights. See also: Anti-dilution provision.

right

A certificate that permits the owner to purchase a certain number of shares, or, frequently, a fractional share of new stock from the issuer at a specific price. Rights are issued to existing stockholders in proportion to the number of shares the stockholders already own. Rights then may be combined with cash to purchase the new shares or they may be sold to other investors. Rights usually have value because they permit the owner to purchase shares of stock at less than the market price. A right is indicated in stock transaction tables by the symbol rt, appearing after the stock's name. Also called stock right, subscription right. See also ex-rights, preemptive right.

Should rights be sold or used?

Rights offerings refer to the right of an investor to maintain his or her percentage ownership in a company when the company decides to issue new stock. Generally the company will do so at a discount to its market price to attract buyers, thus the existing stockholders' rights have value. The decision a rights holder must make is whether to put more money into the stock of this company or to sell the rights in the open market as compensation for the dilution of his or her percentage ownership in the company. TIP: Such a purchase depends completely on the individual's circumstances, goals, prejudices, and objectives—just as in any other stock purchase—and should be approached accordingly.

Thomas J. McAllister, CFP, McAllister Financial Planning, Carmel, IN

Wall Street Words: An A to Z Guide to Investment Terms for Today's Investor by David L. Scott. Copyright © 2003 by Houghton Mifflin Company. Published by Houghton Mifflin Company. All rights reserved. All rights reserved.

Right

The opportunity a corporation gives a shareholder to buy additional shares at a special price for a limited time. Shareholders who don't use their rights can sell them to other investors.

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References in classic literature

But after all he is half justified; publicity is the lawful right of every man; consequently, Burdovsky is not excepted.

Publicity is a noble, beneficent, and universal right. I hope, prince, that you are too progressive to deny this?"

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"When they want to do a thing, in business of course, they must wait till there arises in their brains, somehow, a religious, or ethical, or scientific, or philosophic, concept that the thing is right. And then they go ahead and do it, unwitting that one of the weaknesses of the human mind is that the wish is parent to the thought.

A business man who was also a biologist and a sociologist would know, approximately, the right thing to do for humanity.

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Extend the sphere, and you take in a greater variety of parties and interests; you make it less probable that a majority of the whole will have a common motive to invade the rights of other citizens; or if such a common motive exists, it will be more difficult for all who feel it to discover their own strength, and to act in unison with each other.

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SOCRATES: And in supposing that they will be useful only if they are true guides to us of action--there we were also right?

If a man knew the way to Larisa, or anywhere else, and went to the place and led others thither, would he not be a right and good guide?

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I don't know what you mean, either of you, by right and wrong.

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He was so glad to see us he most cried; and called us honey, and all the pet names he could think of; and was for having us hunt up a cold-chisel to cut the chain off of his leg with right away, and clearing out without losing any time.

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"Not so," replied I; "besides your motion of Northward and Southward, there is another motion which I call from right to left."

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There is also a doubt concerning the pretensions of all those who claim the honours of government: for those who found them either on fortune or family have nothing which they can justly say in their defence; since it is evident upon their principle, that if any one person can be found richer than all the rest, the right of governing all these will be justly vested in this one person.

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The case was evidently this: a position was selected along the river Kolocha- which crosses the highroad not at a right angle but at an acute angle- so that the left flank was at Shevardino, the right flank near the village of Novoe, and the center at Borodino at the confluence of the rivers Kolocha and Voyna.

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