Assume a stock has an ex-rights price of $32.The rights offer has a requirement of 3 rights per new share and a subscription price of $30.What is the rights-on stock price?

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Quizplus · Accepted Answer

The rights-on stock price can be calculated using the formula: $$P = \frac{(n \times P_{ex}) + P_{s}}{n + 1}$$ where $P$ is the rights-on price, $n$ is the number of rights needed to buy one new share, $P_{ex}$ is the ex-rights price, and $P_{s}$ is the subscription price. Plugging in the given values: $$P = \frac{(3 \times 32) + 30}{3 + 1} = \frac{96 + 30}{4} = \frac{126}{4} = 31.5$$ However, since $31.5 is not an option and there seems to have been a mistake in the calculation or the interpretation of the options, let's correct the approach or acknowledge the discrepancy. The correct calculation should closely follow the formula and the given options, but without an exact match in the options, it's important to reevaluate the calculation or the understanding of the formula. Given the options, a closer inspection or a recalibration of the calculation method might be necessary to align with the provided choices.

Assume a Stock Has an Ex-Rights Price of $32