Question

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? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Stock ex-rights What is the value of a right? (Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.) Value of a right Are the rights underpriced or overpriced?

Answer 1

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ke - Microsoft Excel (Product Activation Failed) Review File Home Insert Page Layout Formulas Data View Add-Ins E AutoSum - Cut A A Wrap Text Calibri 11 General Copy Fill Merge & Center Insert Delete Format Paste B I U +.0 .00 .00 0 Conditional Format Cell Sort & Find & Filter Select % Format Painter Clear Formatting as Table Styles Number Editing Clipboard Font Alignment Styles Cells fox FH117 FK EZ FH FA FB FC FD FE FF FG FI EJ FL FM 102 103 INVENTORY 104 KNIGHT 105 106 PRICE OF STOCK EX RIGHT = (3 X 70) (1 X 49) = 107 259 108 3 RIGHTS NEEDED TO BUY A SHARE 109 259/4 = 110 PRICE OF STOCK EX RIGHT = 64.75 a 111 b 112 VALUE OF RIGHT = CURRENT PRICE - EX RIGHT PRICE 113 VALUE OF RIGHT = 70-64.75 5.25 114 RIGHTS ARE UNDERPRICED 115 Cc 116 117 118 119 120 UTILITY, SHARPE, beta LEASING PV, FV, ANNUITY DIR right clean RI CONVEXITY DGM beta КE САРМ port future INDEX YIELD bond portfolio INTL CAP BUD SANDRINE WACC II Rea erences 130% WA 04:53 ENG 28-11-2019