+1-415-670-9189
info@expertsmind.com
Illustrate the maximum and minimum subscription price
Course:- Business Economics
Reference No.:- EM1349662




Assignment Help
Assignment Help >> Business Economics

Company A has announced a rights offer to raise $40 million for a new journal. The journal will review articles after the author pays a non-refundable reviewing fee of $5000 per page. The stock currently sells for $53 per share and there are 4.1 million shares outstanding.

a) Illustrate what is the maximum and minimum subscription price?

b.) If the subscription price is set at $48 per share how many shares must be sold and how many rights will it take to buy one share?

c.) What is the ex-rights price? What is the value of the right?

d.) Show how a shareholder with 1000 shares before the offering with no desire to purchase additional shares is not harmed by the rights offer.




Put your comment
 
Minimize


Ask Question & Get Answers from Experts
Browse some more (Business Economics) Materials
Suppose that John can buy a savings bond for $900 that matures in 3 years and pays John $1,000 with certainty. He is indifferent between this bond and another bond which is
A life insurance salesman spends 9 hours a week on the telephone soliciting new clients. Fro past experience, the salesman estimates that each hour spent calling students, blu
Hulk goes to the gym 20 times a month. His income is $1000 per month and his visits to the gym cost $4 per visit. For simplicity, assume all other goods that Hulk consumes bes
Consider an industry with 2 firms, each having marginal cost equal to zero. What is the competitive equilibrium level of industry output? Calculate the Cournot equilibrium amo
Bear Stearns, Lehman Brothers, Merrill Lynch, and AIG were all firms that teetered on the brink of bankruptcy. What was the fate of each? In what ways were their problems simi
Imagine that you have critical information which must be spread throughout your organization as rapidly as possible, by word of mouth. If you have to choose exactly one of the
The automobile industry is one of the industries seriously affected by the recession that began in late 2007. General Motors and Ford are among the companies affected by this
A profit-maximizing monopolist produces integrated circuits for computers using a single variable input labor. The demand function for the monopolist has been estimated as: Wh