Which of the following statements are correct?
1   A company might make a rights issue if it wished to raise more equity capital.
2   A rights issue might increase the share premium account whereas a bonus issue is likely to reduce it.
3  A bonus issue will reduce the gearing (leverage) ratio of a company.
4   A rights issue will always increase the number of shareholders in a company whereas a bonus issue will not.
A   1 and 2
B   1 and 3
C  2 and 3
D  2 and 4

A