If a Rights Offer Is Used as the Means of Funding

Multiple Choice

If a rights offer is used as the means of funding a positive net present value project,then shareholders should expect the price of their shares to:

A) remain constant as the value of the project will be offset by the issuance of the new shares.
B) decrease due to the additional shares being offered.
C) change but the direction of that change cannot be predicted.
D) change in direct relation to the change in the book value per share.
E) increase due to the increased value of the issuing firm.