Q12. SHOW YOUR WORK. ABC Inc. dedares a rights offering whereby shareholders of record on Friday, July 16 were granted one right for each common share held. Five rights were required to subscribe for each new ABC common share at a subscription price of $23 a share. The rights expire at the dose of business on August 18. Share prices are as follows: Monday, July 12 Tuesday, July 13 Wednesday, July 14 Thursday, July 15 Friday, July 16 Monday, July 19 Tuesday, July 20 $26.50 $26.00 $25.50 $26.15 $26.10 $26.35 $26.75 When will the shares begin to trade ex-rights? When must an investor purchase the shares in order to be entitled to the rights offering? What is likely to happen to the price of the common shares on the first day of the ex-rights period? 2 What is the intrinsic value of a right on the last day of the cum-rights period? What is the value of a right on the first day of the ex-rights period