Question
Red Dog has announced a rights offering to raise $60 million. Its stock currently sells for $55 per share and there are 4.5 million shares
Red Dog has announced a rights offering to raise $60 million. Its stock currently sells for $55 per share and there are 4.5 million shares outstanding. The subscription price is set at $40 per share.
How many shares must be sold?
How many rights will it take to buy one share?
Assuming the stock is still worth $55 when the stock goes ex rights, what is the value of a right?
What is the value of a share once the rights are detached?
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Essentials Of Investments
Authors: Zvi Bodie, Alex Kane, Alan Marcus
11th Edition
1260288390, 978-1260288391
