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 ?
When the electronic boom hit the game industry in 1977 and 1978, Selchow & Righter had a new executive officer.
Selchow & Righter waited patiently on the sidelines, watching events unfold during the electronic madness.
When the market for electronic items intensified, and traditional game manufacturers felt the pinch, Selchow & Righter refrained from pouring the lion's share of its marketing dollars into the new game craze.
Along with Lexor and Sensor, electronic crossword games, Selchow & Righter introduced Reader's Digest Q & A, an electronic quiz game.
50 Selchow & Righter Catalogs, 1981, 1982, 1983; Playthings 81 (Sept.
When the Canadian inventors of Trivial Pursuit shopped in the United States for a suitable licensing arrangement, one of their stops was Selchow & Righter. The company sensed that this was the Scrabble company's kind of game and determined to acquire the license.
In 1984, Selchow & Righter estimated sales of 20 million Trivial Pursuit games.
Selchow & Righter's history validates much that is already known by business historians about the conduct of business in the nineteenth century, particularly the metamorphosis of the jobbing business and its gradual eclipse.
First, Elisha Selchow and John Righter's business never confronted problems imposed by its competition or by the market that it could not solve within its traditional structure.
Second, the nature of the toy business itself assisted Selchow & Righter in its enterprise.
Selchow & Righter's story also says something about one segment of the American toy industry.
(Photograph courtesy of Selchow & Righter Company Archives.)