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 ?
Anxious to get things sorted before Jennifer left, we got in touch with Mesh straight away and explained the situation.
"I don't think it's a reason to stop racing -- they are going to have to start somewhere, so I think they should start straight away."
"One was covered in blood on his head and straight away they sat him down and took his boot off.
Usually when you get beat you don't want to have to wait 10 days for the following game, you want it straight away. But I think this break is different for us.
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This stirred Nunthorpe into action and they responded by going into the lead through a good strike, straight away they doubled their lead with another clinical finish.
"We came back on the pitch not thinking, he missed the pass and he went straight away to score.
"But this is the first one that went in straight away.
"I gave myself a bit of a chance but I thought the doctors were going to stop it straight away.
"He had a cut to the eye, I thought he came off worst, but obviously my eye started swelling straight away and then he caught me on it straight away."
Officers are now urging anyone who sees anything suspicious to get in touch straight away.
I saw straight away that he had signs of authority.