The fool says:
"So what the heck is a rights offering?
In a typical secondary offering, a company raises money by selling new shares of stock to the public. Or so it seems.
Here's what actually happens: The company sells shares to an investment bank (the underwriter) at a predetermined price, thus eliminating the risk that the company won't be able to sell as many shares as it wants. The investment bank then uses its distributional might and army of brokers to sell the stock to the public. As payment, the investment bank collects a juicy underwriting fee."
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