3 rights are required to purchase one new share.
Total cost of rights = $200,000
Xyz corporation has 15,000 shares outstanding at $50 each
$40 subscription price
rights are required to purchase one new share= (200,000/40 = 5,000)
=(15,000/5,000 = 3)
therefore , rights are required to purchase one new share.
Shares are units of equity ownership in a corporation. For some companies, shares exist as a financial asset providing for an equal distribution of any residual profits, if any are declared, in the form of dividends. Shareholders of a stock that pays no dividends do not participate in a distribution of profits. Instead, they anticipate participating in the growth of the stock price as company profits increase.
Shares represent equity stock in a firm, with the two main types of shares being common shares and preferred shares. As a result, "shares" and "stock" are commonly used interchangeably.
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