Question

Jefferson Refining is issuing a rights offering wherein every shareholder will receive one right for each share of stock they own. The new shares in this offering are priced at $19 plus 3 rights. The current market price of the stock is $26.80 a share. What is the value of one right? Provide your answer in dollars and cents, to the nearest $0.01.

Answer 1

Answer:

value of right = $1.95

Explanation:

given data

new shares =  $19 plus 3

current market price = $26.80

to find out

value of one right

solution

we get here value of  rights that is express as

value of rights = $\frac{stock \ price - right\ subcription\ price}{no\ of\ right + 1}$    .............1

value of rights = $\frac{26.80-19}{3+ 1}$

value of rights = $\frac{7.8}{4}$

value of right = $1.95