The present market price is $80 per share; the subscription price is $60 per share. A shareholder needs 3 rights to purchase a new share. The value of a right is

Name: The present market price is $80 per share; the subscription price is $60 per share. A shareholder needs 3 rights to purchase a new share. The value of a right is
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Question

Quizplus · Accepted Answer

The value of a right is calculated as (Market Price - Subscription Price) / (Number of Rights Needed + 1). Here, it is ($80 - $60) / (3 + 1) = $5.00.

The Present Market Price Is $80 Per Share; the Subscription