ABC stock price is $5. Briefly discuss why the price of the new right shares are unlikely
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Question:
ABC stock price is $5. Briefly discuss why the price of the new right shares are unlikely to be priced at $4.70.
(b) XYZ Company is making a 1-for-2 rights issue, i.e. an investor who holds 2 shares will be entitled to buy 1 new share. The new rights share will be priced at $3. If XYZ shares traded at $4 the day before the stock went ex-rights.
Calculate the theoretical ex-rights price the next day.
(c) Briefly discuss one advantage of a value-weighted stock index compared to a price-weighted stock index.
(d) Describe two possible reasons for an investor buying an ETF instead of a mutual fund.
Related Book For
Accounting and Finance An Introduction
ISBN: 978-1292088297
8th edition
Authors: Peter Atrill, Eddie McLaney
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