Homework Answers
| stock price | $51.25 |
| value of right | $11.75 |
note:
ex right price = [(existing price * number of rights) + amount to be remitted] / (number of rights +1)
=> [($63.*3)+16]/(3+1)
=>$51.25.
value of right = existing price - ex rights price
=>63-51.25
=>$11.75.
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Problem 15-15 Valuing a Right [LO4]
Knight Inventory Systems, Inc., has announced a rights offer.
The company has announced that it will take three rights to buy a
new share in the offering at a subscription price of $55. At the
close of business the day before the ex-rights day, the company’s
stock sells for $90 per share. The next morning, you notice that
the stock sells for $70 per share and the rights sell for $3
each.
What is...
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Knight Inventory Systems, Inc., has announced a rights offer. The company has announced that it will take three ri...
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Knight Inventory Systems, Inc., has announced a rights offer. The company has announced that it will take three rights to buy a new share in the offering at a subscription price of $49. At the close of business the day before the ex-rights day, the company's stock sells for $70 per share. The next morning, you notice that the stock sells for $58 per share and the rights sell for $2 each What is the value of the stock ex-rights?...
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Knight Inventory Systems, Inc., has announced a rights offer.
The company has announced that it will take three rights to buy a
new share in the offering at a subscription price of $55. At the
close of business the day before the ex-rights day, the company’s
stock sells for $90 per share. The next morning, you notice that
the stock sells for $70 per share and the rights sell for $3
each.
What is...
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