Question
The management of a very successful Scottish company PSV decides to go with a rights issue. For every 10 current shares, it is possible to
The management of a very successful Scottish company PSV decides to go with a rights issue. For every 10 current shares, it is possible to buy one new share for 80p. The theoretical ex-rights price is 120p.
1. What is the pre-issue price?
2. Demonstrate that an investor who holds 10 shares before the rights issue will be equally well-off buying the additional share or selling the rights.
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The Handbook Of Energy Trading
Authors: Stefano Fiorenzani, Samuele Ravelli, Enrico Edoli
1st Edition
1119953693, 978-1119953692
