Motorhed Inc is currently trading at $8 per share with 2.5 billion shares on issue. It announces a 2 for 7 renounceable rights issue with a subscription price of $6 per share. XYZ Superannuation owns 2% of Motorhed. One of the directors of the super fund suggests that XYZ should exercise the rights. However, the Chairman of the super fund suggests that instead of exercising the rights, they should sell the rights and keep the sales proceeds. Assume that all rights offered by Motorhed (to all shareholders) are exercised and ignore other factors. Which of the following statements best describes the change to XYZs wealth and its voting power if instead of exercising the rights, it follows the Chairmans suggestion?

Group of answer choices

1 None of the other statements is correct.

2 As discussed in the lecture, both XYZ Superannuations wealth and voting power will remain the same.

3 XYZ Superannuations wealth will be reduced by $22.22 million, whereas its voting power will remain the same.

4 XYZ Superannuations wealth will remain the same, whereas its voting power will decrease by 0.645%.

5 XYZ Superannuations wealth will be reduced by $22.22 million, and its voting power will be reduced by 0.645%.