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Thunder Corp. has stock that currently sells for $ 1 2 per share, and there are 6 million shares outstanding. It has announced rights offer
Thunder Corp. has stock that currently sells for $ per share, and there are million shares outstanding. It has announced rights offer to raise $ million, with the subscription price set at $ per share. The following rights offer timetable is planned
January announcement date
February holder of record date
February rights expiration date
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Suppose you own shares of Rainbow Corp. stock.
a How many shares must be sold to raise the required amount?
b How many rights are required to buy one new share?
c What is the value of a right?
d What is the exrights price?
e What is the exrights date?What is your wealth position and percentage ownership in this company on the announcement date?
f What is your wealth position and percentage ownership in this company if you decide to sell your rights before the expiration date?
g What is your wealth position and percentage ownership in this company if you decide to exercise your rights before the expiration date?
h What is your wealth position and percentage ownership in this company if you decide to let your rights expire?
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