Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Need help with value of right & immediate profit. I followed some calculations on several post and got $4.20 for value of right & $72

Need help with value of right & immediate profit.

I followed some calculations on several post and got $4.20 for value of right & $72 for immediate profit. Connect said that was incorrect.

image text in transcribed

image text in transcribed

Knight Inventory Systems, Inc., has announced a rights offer. The company has announced that it will take four rights to buy a new share in the offering at a subscription price of $29. At the close of business the day before the ex-rights day, the company's stock sells for $50 per share. The next morning, you notice that the stock sells for $44 per share and the rights sell for $2 each. What is the value of the stock ex-rights? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Stock ex-rights $ 45.80 What is the value of a right? (Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.) Value of a right Are the rights underpriced or overpriced? Underpriced What is the amount of immediate profit you can make on ex-rights day per share? (Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.) Immediate profit Knight Inventory Systems, Inc., has announced a rights offer. The company has announced that it will take four rights to buy a new share in the offering at a subscription price of $29. At the close of business the day before the ex-rights day, the company's stock sells for $50 per share. The next morning, you notice that the stock sells for $44 per share and the rights sell for $2 each. What is the value of the stock ex-rights? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Stock ex-rights $ 45.80 What is the value of a right? (Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.) Value of a right Are the rights underpriced or overpriced? Underpriced What is the amount of immediate profit you can make on ex-rights day per share? (Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.) Immediate profit

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Global Business Today

Authors: Charles Hill

7th Edition

0078137217, 9780078137211

More Books

Students also viewed these Finance questions

Question

What reward will you give yourself when you achieve this?

Answered: 1 week ago