night Inventory Systems, Inc., has announced a rights offer. The company has ann
ID: 2712502 • Letter: N
Question
night Inventory Systems, Inc., has announced a rights offer. The company has announced that it will take four rights to buy a new share in the offering at a subscription price of $25. At the close of business the day before the ex-rights day, the company’s stock sells for $50 per share. The next morning, you notice that the stock sells for $42 per share and the rights sell for $2 each.
What is the amount of immediate profit you can make on ex-rights day per share????? I cant figure this one out.
night Inventory Systems, Inc., has announced a rights offer. The company has announced that it will take four rights to buy a new share in the offering at a subscription price of $25. At the close of business the day before the ex-rights day, the company’s stock sells for $50 per share. The next morning, you notice that the stock sells for $42 per share and the rights sell for $2 each.
Explanation / Answer
Value of 4 right = 4 x $2 = $8 Subscription price = $25 Ex right price = $42 Profit on sale of ex right = 42-25-8 =$9 each
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.