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Assume a firm issued rights to fund a new project. If this project immediately increases the market value per share, then: the shareholders will be
Assume a firm issued rights to fund a new project. If this project immediately increases the market value per share, then:
the shareholders will be worse off than before, whether or not they participate in the offering.
the EPS will also immediately increase.
the book value per share had to remain constant.
no dilution of ownership position can occur.
the firm has acted in the best interest of its pre-rights shareholders.
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