What is the value of a right-rights-on or right-off

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A stock is currently quoted at 53 on NASDAQ. A Rights Offering has been declared with an exercise price of 48, and 4.92 rights are needed to buy a new share of stock. If you own 10 round lots of this company, answer the following:

1.What is the value of a Right, Rights-On?

2. What is the value of a Right, Rights-Off?

3. What is the Ex-rights price of the stock?

4. How many new shares of stock can you buy?

5. What action do you take to get the new shares sent to you?

6. Assume an investor owns a round lot. Show how the total value of his investment is affected if he fails to exercise his option.

Reference no: EM13335975

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