Question
Alumina Limited has a share price of $2.72. The company has made a renounceable rights issue offer and the offer is a 2-for-8 pro-rata issue
Alumina Limited has a share price of $2.72. The company has made a renounceable rights issue offer and the offer is a 2-for-8 pro-rata issue of ordinary shares at $2.40 per share.
- Calculate the price of a right.
- Calculate the theoretical ex-rights share price.
- Explain why an actual ex-rights share price may differ from the calculated theoretical price.
Step by Step Solution
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Step: 1
The price of a right can be calculated as follows The offer is a 2for8 prorata issue which means tha...
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Financial Accounting and Reporting
Authors: Barry Elliott, Jamie Elliott
14th Edition
978-0273744535, 273744445, 273744534, 978-0273744443
