Show that the value of a right just prior to expiration can be written as: Value of

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Show that the value of a right just prior to expiration can be written as:

Value of a right = P_RO − P_X = (P_RO − P_S)/(N + 1)

where PRO, PS, and PX stand for the rights-on price, the subscription price, and the ex rights price, respectively, and N is the number of rights needed to buy one new share at the subscription price.

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Fundamentals Of Corporate Finance

ISBN: 9781265553609

13th Edition

Authors: Stephen Ross, Randolph Westerfield, Bradford Jordan

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Question Posted: Aug 24, 2021 06:36 AM

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Show that the value of a right just prior to expiration can be written as: Value of

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Fundamentals Of Corporate Finance

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