The difference between the rights-on and ex-rights common stock price is equal to the value of a right to purchase future stocks, all other things being equal.

Question

Quizplus · Accepted Answer

This statement is true. The difference between the rights-on and ex-rights common stock price represents the value of a right to purchase future stocks, as investors who purchase shares before the ex-rights date are entitled to receive additional shares in the future at a discounted price. This can affect the overall value of the stock, and the difference in price reflects the value of this right.

The Difference Between the Rights-On and Ex-Rights Common Stock Price