Knight Inventory Systems, Incorporated, has announced a rights offer. The company has announced that it will take three rights to buy a new share in the offering at a subscription price of $37At the close of business the day before the ex-rights day, the company's stock sells for $59 per share. The next morning, you notice that the stock sells for $48 per share and the rights sell for $2 each.

a. What is the value of the stock ex-rights? b. What is the value of a right? c. Are the rights underpriced or overpriced? d. What is the amount of immediate profit per share that you can make on ex-rights day per share?