Question
Nikos has 5 shares in ABC. The current share price is 60 euros. Nikos also has 48 cash, while at the moment his portfolio consists
Nikos has 5 shares in ABC. The current share price is 60 euros. Nikos also has 48 cash, while at the moment his portfolio consists of shares and cash. Nikos has just been informed that ABC will increase its share capital with preference rights. The terms of the increase are 1 new share to 5 old shares at the price of 48 euros. Calculate: A) The price of the right and what is the value of Nikos' portfolio before the share capital increase. B) If Nikos participates in the increase with rights and buys shares, what will be the value of his portfolio? C) If he sells all the rights, but keeps the shares and keeps the cash, what is the value of his portfolio? D) If he sells all the rights and all the shares and keeps the cash, what is the value of the portfolio? E) If Nikos can't decide what to do, which of the options b, c, d will benefit him the most?
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