Rights Offerings the Clifford Corporation has announced a rights offer to raise $50 million for a new journal, the Journal of Financial Excess. This journal will review potential articles after the author pays a non refundable reviewing fee of $5,000 per page. The stock currently sells for $60 per share, and there are 5.2 million shares outstanding.

a. What is the maximum possible subscription price? What is the minimum?

b. If the subscription price is set at $55 per share, how many shares must be sold? How many rights will it take to but one share?

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

d. Show how a shareholder with 1,000 shares before the offering and no desire (or money) to buy additional shares is not harmed by the right offer.