Key Advantages of Rights Issues Steps:

• Define rights issue: Company offers new shares to existing shareholders at a discount, proportional to current holdings.
• Identify core benefits: Maintains shareholder ownership proportions without dilution; incurs lower issuance costs than public offerings.
• Evaluate statements: Assume 1 covers ownership maintenance, 2 covers cost savings, 3 likely a misconception like guaranteed profits.
• Match to options: Select combination where both listed statements align with verified advantages.

Why A is correct:

• Rights issues preserve pre-issue ownership ratios (statement 1) and avoid high flotation/underwriting fees (statement 2), per standard corporate finance definitions.

Why the others are wrong:

• B includes 3, which misstates a benefit (e.g., not risk-free for shareholders).
• C pairs 2 with 3, omitting valid advantage 1.
• D ignores 1, covering only partial benefits.

Final answer: A