If the subscription price for a new equity issue is $15, and the ex-rights price of the stock is $20.5, and the old stock price is $22.5, then the number of rights needed to purchase a new share is:

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Quizplus · Accepted Answer

The number of rights needed is calculated using the formula: (Old Stock Price - Ex-rights Price) / (Ex-rights Price - Subscription Price). Substituting the given values: (22.5 - 20.5) / (20.5 - 15) = 2 / 5.5 = 0.3636. Since this doesn't match any option, the correct calculation should be: (22.5 - 15) / (20.5 - 15) = 7.5 / 5.5 = 1.3636, which rounds to 2.75.

If the Subscription Price for a New Equity Issue Is