Problem

Value of a Right Show that the value of a right can be written as:Value of a right = PRO -...

Value of a Right Show that the value of a right can be written as:

Value of a right = PRO - PX =(PRO - PS)/(N + 1)

where PRO, PS, and PX stand for the “rights-on” price, the subscription price, and the ex-rights price, respectively, and N is the number of rights needed to buy one new share at the subscription price.

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