For a particular stock the old share price is €20, the ex-rights price is €15, and the number of rights needed to buy a new share is 2.Assuming everything else constant, the subscription price is
______ .

Question

Quizplus · Accepted Answer

The ex-rights price is calculated as a weighted average of the old share price and the subscription price. Given the ex-rights price (€15), old share price (€20), and the number of rights needed (2), the subscription price can be calculated using the formula: Ex-rights price = [(Old price * number of old shares) + (Subscription price * number of new shares)] / (Total number of shares). Solving for the subscription price gives €5.

For a Particular Stock the Old Share Price Is €20