I had this question while reviewing rights offering content. The online textbook says that when a company issues a rights offering, current owners are able to buy new shares before the public so that they can keep the same ownership % if desired.
To buy new shares you might need 1 right or 5 rights, it depends on the company’s offer. If the stockholder wants to exercise all rights, how could he keep the same % of ownership if a new share requires 5 rights and he is only getting 1 right per share owned.
Does he always get the same amount of rights per share compared to the amount of rights needed to buy new shares?
Or does the amount of rights needed to buy a share depends on the amount of shares issue so that the stock holder has enough rights to buy the same ownership percentage he has in new shares?