What is theoretical ex-rights share price of the firm

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Reference no: EM131944607

Myer Holdings Limited has a share price of $2.82. The company has made a renounceable rights issue offer to shareholders. The offer is a three-for-ten pro-rata issue of ordinary shares at $2.60 per share.

What is the theoretical ex-rights share price of the firm? What is the value of the right?

Explain the effect of the offer being renounce able. Explain why an actual ex-rights price of a share may at times differ from the calculated theoretical price.

Reference no: EM131944607

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