Hello, everyone needed help in this question.
A company offers two shares for every five held to its shareholders. the issue price is rs.14 and the rights price in the market is rs.19. what is the market value of a right. ( Ans. Rs. 1.43)
how is to be calculated and by using which formula.
dear simran jeet please see below the solution.
the cost of 5 original shares = 19*5=95
Cost of 2 Right Shares = 14*2 = 28
the total of above is 123 and avg of 7 shares is 17.57 which means you need have a profit of 1.43 RS(19-17.57)19 being the original cost of the shares
Thanks Asif bhai jaan for your reply.
CAclubindia
