Right

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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

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.
References in periodicals archive ?
The British aristocracy have done very well out of Ireland but now the time has come for the Irish people to claim what is rightfully ours, without fear on prejudice.
John Updike has an opinion on the matter, too, and rightfully so.
As an over-the-counter remedy, PC-SPES posed a health hazard and was rightfully removed from the shelves, Nagourney says.
However, our Senators and Congressmen failed to fund the bill That means our President would have to take money from other programs and get approval from Congress or find new money so disabled veterans could receive their rightfully earned benefits.
The Republican Senators said that they did not want to usurp the regulatory powers that rightfully belong to the states by regulating non-ERISA plans, especially since many states had already addressed the patient protection issue.
Therefore, the IRS could not assess interest until October 15 of each year, when May used the funds that rightfully belonged to the government by applying the overpayment to the following year's estimated tax.
If they really wanted to please us, instead of coming to my house with flowers, perhaps they should now start talking about stepping down tomorrow and putting my father in the place where he rightfully belongs.
This critique (slightly modified) is now the preface to Montaigne et la melancolie, and in it Fumaroli rightfully stresses the natural affinity between Screech and his subject matter: the religious and spiritual credo that lies at the heart of the Essais.
With geopolitical tensions, volatile prices and a tight supply/demand balance, all Americans are rightfully concerned about maintaining secure supplies of energy at reasonable prices.
The Valley's elected political leaders can rightfully take pride in their own achievement.
Nevertheless, conservatives have been rightfully angered over this attempted appeasement.
Albert Kroll is truly deserving of this award, and we appreciate the opportunity to rightfully recognize the Commissioner's commitment to our industry.