An investor who owns 100 shares of JJJ Company common stock with a cost of P120 a share received 100 stock rights entitling him to buy one new share at P100 for every four held. At the date of the issuance of the rights, market values were: per share, ex-rights, P140; and per right, P10. If the investor sells his rights at the market value of P10 each, how much gain/(loss) per right will he make?

An investor who owns 100 shares of JJJ Company common stock with a cost of P120 a share received 100 stock rights entitling him to buy one new share at P100 for every four held. At the date of the issuance of the rights, market values were: per share, ex-rights, P140; and per right, P10. If the investor sells his rights at the market value of P10 each, how much gain/(loss) per right will he make?

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter12: The Cost Of Capital

Section: Chapter Questions

Problem 4P

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