Stock Rights

[stok rīts]

What is the definition of Stock Rights?

Stock rights are privileges granted to existing shareholders of a corporation, allowing them to purchase additional shares at a price typically below the current market value before the shares are offered to the public. These rights can be exercised, sold, or allowed to expire.

Using Stock Rights in an Example

A company may issue stock rights to its current shareholders, enabling them to buy new shares at $10 each, even though the current market price is $15. This allows shareholders to increase their holdings at a lower cost, potentially benefiting from future increases in stock value.

Using Stock Rights in a sentence

During the board meeting, the CFO explained how issuing stock rights could potentially dilute the current share value but also provide a way to raise capital efficiently.

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