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1.ABC Corp has issued rights to its shareholders. The subscription price is $20.00; and 5 rights are needed along with the subscription price to buy

1.ABC Corp has issued rights to its shareholders. The subscription price is $20.00; and 5 rights are needed along with the subscription price to buy one of the new shares. The stock is selling for $26 rights on.

a.What would be the value of one right?

b.When the stock goes ex-rights what would the new stock price be?

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