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Value of a right

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Calculate the value of a right for XYZ Corporation involving a 6-1 shareholder rights offer at $30 with a stock trading at $50 (e.g. 6 million shares are currently outstanding and 1 million more will be issued).

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Solution Summary

The solution explains how to calculate the value of a right using stock trading and share values.

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Vakue of a right = Current market price - market price after the rights issue (ex rights ...

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