What would his dollar profit on the rights be

Reference no: EM13269057

Todd winningham has $4,800 to invest. he has been looking at gallagher tennis clubs, inc common stock. Gallagher has issued a rights offering to its common stockholders. Six rights plus $48 cash will buy one new share. Gallaghers stock is selling for $66 ex-rights.

A. How many rights could Todd buy with his $4,800? Alternatively, how many shares of stock could he buy with the same $4,800 at $66 per share?
B. If todd invests hiis $4,800 in gallagher rights and the price of gallagher stock rises to $70 per share ex-rights, what would his dollar profit on the rights be?
C. If todd invests his $4800 in gallagher stock and the price of the stock rises to $70 per share ex-rights, what would his total dollar profit be?
D. What would be the answer to part B if the price of Gallaghers stock falls to $40 per share ex rights instead of rising to $70?
E. What would be the answer to part C if the price of gallaghers stock falls to $40 per share ex-rights?

Reference no: EM13269057

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