The Holyoke Corporation has 120,000 shares outstanding with a current market price of €8.10 per
share.The company needs to raise an additional €36,000 to ﬁnance new expenditures, and has
decided on a rights issue.The issue will allow current shareholders to purchase one additional
share for 20 rights at a subscription price of €6 per share.
Calculate the ex-rights price that would make a new shareholder indifferent between buying shares
at the old share price and exercising the rights or buying the shares ex-rights.

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The Answer of The Holyoke Corporation has 120,000 shares outstanding with a current market price of €8.10 per
share.The company needs to raise an additional €36,000 to ﬁnance new expenditures, and has
decided on a rights issue.The issue will allow current shareholders to purchase one additional
share for 20 rights at a subscription price of €6 per share.
Calculate the ex-rights price that would make a new shareholder indifferent between buying shares
at the old share price and exercising the rights or buying the shares ex-rights.

The Holyoke Corporation Has 120,000 Shares Outstanding with a Current