If the ex-rights price were set at 790 would you as a

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Reference no: EM13452151

The Obama Corporation has 120,000 shares outstanding with a current market price of $8.10 per share. The company needs to raise additional $36,000 to finance new expenditures, and has decided on a rights issue. The issue will allow current shareholders to purchase one additional share for 20 rights at a subscription price of $6 per share.

If the Ex-Rights price were set at $7.90, would you, as a potential new shareholder, chose to buy shares ex-rights or buy shares at the old price ad exercise your rights?

a) Buysharesex-rights

b) Buy shares at old price and exercise her rights c) Be indifferent between the two strategies

d) Cannot be determined

Reference no: EM13452151

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