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Calculate the theoretical ex-split price of a share

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Reference no: EM132505960

FHL has a cum-rights share price of $2.00. The company has made a renounceable rights issue offer to shareholders. The offer is a one-for-four pro-rata issue of ordinary shares at $1.80 per share.

Question 1: Calculate:

a. The price of the right. (Im)

b. The theoretical ex-rights share price. Im)

Question 2: ATH has declared a five-for-one share split. If the current pre-split price of a share is $40, calculate the theoretical ex-split price of a share.

Reference no: EM132505960

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