Which of the following regarding rights offerings is false?

A) Pure rights offerings are typically cheaper than other types of offers.
B) Rights offerings protect the proportionate interest of existing stockholders.
C) Rights offerings protect against underpricing.
D) Shareholders that choose not to participate in the offering cannot sell their rights to others.
E) The price drop in a rights offering can be greater than in a cash offering.

Rights Offerings

An offer made by a company to its shareholders to purchase additional shares directly from the company at a specified price and within a specific time period.

Pure Rights Offerings

A method of raising capital in which a company offers existing shareholders the right to purchase additional shares directly, usually at a discount.

Price Drop

A decrease in the price of a commodity, security, or other financial instrument, often reflecting changes in demand and supply.