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he management of the very successful Scottish company PSV decides to go with a hts issue. For each 10 current shares, it is possible to

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he management of the very successful Scottish company PSV decides to go with a hts issue. For each 10 current shares, it is possible to buy one new share for 80p. e theoretical ex-rights price is 120p. 2uestions What is the pre-issue price? Demonstrate that an investor who holds 10 shares before the rights issue will be equally well off buying the additional share or selling the rights - In summary Pre-issue stock price (P0)= unknown Price of new stock (Ps)=80p Ex-rights price (PX)=120p 1 new share for each 10 old shares

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