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ex rights

Maneesh 03 May 2020 at 14:24 PM

The value of a right when the stock is trading ex-rights is:
A) $ 2.50
B) $ 2.00
C) $ 0.50
D) $ 0.40

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FACULTY 14 May 2020 at 03:27 PM

Vr= P0-Pn/r+1

Where:   Po = The value of a share ex-rights

Vr = The value of the right (ex-rights)    =$48-$40 /4    

                                                                     = $2 (option B)

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