MCQ10. The stock of Dunli Fang Enterprises is currently selling for $48 a share. The company has decided to raise funds through a rights offering wherein every shareholder will receive one right for every share of stock they own. The new shares being offered are priced at $42 plus five rights. What is the (theoretical) value of one right?

1. 0.20
2. 0.50
3. 1.00
4. 5.00

MCQ11. Suppose an Xiaoyi Nie has utility function U(W)=ln(W). Her current wealth is $1,000. If she is faced with 50/50 chance of losing and winning $50, how much will she pay to avoid such uncertain situation?

1. 6.907
2. 1000
3. 1.255
4. 998.745