The cheapest method of marketing of securities with the only cost incurred being on sending 'letters of rights' to existing holders is

The correct answer is option 3 i.e Rights issue

Explanation:

Rights issue

• It is most economical method of raising fresh capital because it includes no underwriting and brokerage cost.
• Under this method, the share of existing company are offered to it's existing share holders and letter of rights are send to them.
• Rights letter is a formal document informing current share holder their right to buy rights issue.

Public issue through prospectus method

• Under this method, the companies issues a prospectus to the Public inviting offers for subscription.
• The investors who are interested in the securities apply for the securities they are willing to buy.

Offer for sale method

• It is a simpler method of share sale through the exchange platform for listed companies.
• Through this process, promoters in public companies can sell their shares and reduce their holdings from publicly listed companies.

Subscription by inside coterie method

• A company may resort to subscription by promoters and directors.
• This method helps to save the expenses of public issue.
• Generally, a percentage of new issue of securities is reserved for subscription by the inside coteriewho can in this way share the future prosperity of the company.