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What is the value of a right

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Reference no: EM132477748

A stock sells for $45 rights-on, new shares can be purchased at subscription price of $41 per share. Seven rights are required to purchase one share.

(a) What is the value of a right?

(b) What is the stock price the day the stock goes right-off.

(c) What are the options of current shareholders in rights offering? What is the wealth effect of rights offering?

(d) List two advantages of a rights offering to issuing corporations?

Reference no: EM132477748

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