XYZ Corp.'s stock is currently selling at $13 per share. There are 1 million shares outstanding. The
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Question:
XYZ Corp.'s stock is currently selling at $13 per share. There are 1 million shares outstanding. The firm is planning to raise $2million to finance a new project. What is the ex-right stock price, the value of a right, and the appropriate subscription prices, if (a) Two share of outstanding stock are entitled to purchase one additional share of the new issue. (b) Four shares of outstanding stock are entitled to purchase one additional share of the new issue. (c) How does the stockholders' wealth change from a to b?
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