The ZYX Corporation intends to issue 50,000 new shares to raise funds for expansion of current plant facilities. The current share price is $40 and there are 500,000 shares outstanding. The number of rights needed to buy a share of stock should be:

Question

Quizplus · Accepted Answer

To calculate the number of rights needed to buy a share of stock, we use the following formula:
Number of rights needed to buy a share = Number of new shares issued / Number of existing shares + new shares
Number of rights needed to buy a share = 50,000 / (500,000 + 50,000) = 0.1
Therefore, the answer is D) 0.10.

The ZYX Corporation Intends to Issue 50,000 New Shares to Raise