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(a) The current market price of a stock is $6.00. The rights issue is two-for-five, priced at $5.50. (i) What is the theoretical ex-rights price?

(a) The current market price of a stock is $6.00. The rights issue is two-for-five, priced at $5.50. (i) What is the theoretical ex-rights price? (ii) Why may the actual ex-rights share price differ from the theoretical price?

(b) BH Mining declared a 70 per cent partly franked dividend of $0.70 per share. The company pays a corporate tax rate of 30 per cent. If a shareholder holds 100 shares of BH Mining and the shareholders marginal tax rate is 47 per cent, what is the tax payable by the shareholder?

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