The current market price of a company's shares is $10. The company is planning to make a 1 for 10 rights issue at a subscription price of $8. You hold 100 shares at the time the rights issue is to be made. If you exercise your rights, what is the total number of shares you will now own?

Question

Quizplus · Accepted Answer

With a 1 for 10 rights issue, for every 10 shares you own, you can buy 1 more share at the subscription price. Owning 100 shares means you can buy 10 more shares (100/10). Therefore, after exercising your rights, you will own 110 shares in total.

The Current Market Price of a Company's Shares Is $10