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# Description of Basic Concepts in Finance

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1. A company is attempting to raise \$5,000,000 in new equity with a rights offering. The subscription price will be \$40 per share. The stock currently sells for \$50 per share and there are 250,000 shares outstanding. How many rights are needed to buy a new share?

2. What's the duration of a 2 year annual 10% bond that is selling at a par value of \$1,000?

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#### Solution Preview

1. A company is attempting to raise \$5,000,000 in new equity with a rights offering. The subscription price will be \$40 per share. The stock currently sells for \$50 per share and there are 250,000 shares outstanding. How many rights are needed to buy a new share? ...

#### Solution Summary

There are two problems. Solution to first problem describes the steps to calculate the number of rights needed to buy a new share. Solution to second problem calculates duration of a coupon paying bond.

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