Calculate the Theoretical Ex-Rights price (in pence)? Calculate the price each right is likely to be traded at (in pence)? Calculate the investors total wealth before the rights issue?
Jason Bond plc has 40 million ordinary shares of 100p each in issue. These shares are listed on the stock exchange at 160p. The directors of the company require additional long-term capital and have decided to make a one-for-four rights issue at 120p per share.
An investor with 4,000 shares in Jason Bond plc has contacted you for investment advice. She is undecided whether to take up the rights issue, sell the rights, or allow the rights offer to lapse. She also informs you that she has savings of £10,000 in the bank.
Please do not use £ or any other currency denomination. Just input you answer as a numerical figure without decimal places.
Please do not use the ‘ separator or the ‘ as a decimal place. Just input you answer as a numerical figure without decimal places.
Please do not use p (pence). Just input you answer as a numerical figure without decimal places.
Questions:
Calculate the Theoretical Ex-Rights price (in pence)?
Calculate the price each right is likely to be traded at (in pence)?
Calculate the investors total wealth before the rights issue?
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