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FMTERPchp 12

This document discusses a rights issue where shareholders receive 1 new share for every 4 shares currently held at a price of $1.50 per share. The theoretical ex-rights price is calculated as $1.90 per share. Shareholders gain 40 cents per new share acquired through the rights issue despite paying $1.50, as the share value is now $1.90. The value of the rights issue per existing share is 10 cents.

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AnisahMahmood
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41 views1 page

FMTERPchp 12

This document discusses a rights issue where shareholders receive 1 new share for every 4 shares currently held at a price of $1.50 per share. The theoretical ex-rights price is calculated as $1.90 per share. Shareholders gain 40 cents per new share acquired through the rights issue despite paying $1.50, as the share value is now $1.90. The value of the rights issue per existing share is 10 cents.

Uploaded by

AnisahMahmood
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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SOURCES OF

FINANCE- RIGHTS
ISSUE
1 share @$1.5 for
every 4. current MP

TERP
4x2+1x1.5=9.50/5=1.90
=1.90

VALUE OF RIGHT TERP- ISSUE PRICE= 1.90-1.50


= 40 cents Shareholder gain 40 cents altho buy at
51.50 cos now share value is $1.90

VALUE OF RIGHTS PER EXISTING SHARE VALUE OF RIGHT = 40 CENTS


=10 CENTS EXISTING SHARE =4 40/4=10 CENTS

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