SIE Exam Question 63: Answer and Explanation

Question: 63

All of the following are true of an investor's rights in a rights offering except that

• A. in the event the investor chooses to not purchase the shares offered, he or she may sell those rights to another investor.
• B. the investor chooses to purchase the shares.
• C. the investor’s rights expire after 35 days due to the current market price dropping below the offering's subscription price.
• D. all of the above are true.

Correct Answer: C

Explanation:

Investors' rights expire only after 45 days. Additionally, investors may choose to exercise the rights to purchase additional shares or sell those rights to another investor who would like to buy those shares.