Jelly Beans, Inc., is proposing a rights offering. There are 100,000 outstanding shares at $25 each. There will be 10,000 new shares issued at a $20 subscription price.

1. What is the value of a right?
2. What is the ex-rights price?
3. What is the new market value of the company?
4. Why might a company have a rights offering rather than a common stock offering?

Answer rating: 100% (QA)

1 A right is a transferable subscription privilege to buy a specified number of shares of stock ... View the full answer