Simranjeet Singh (Proprietor at S Simranjeet & Associates Company Secretaries) (4396 Points)
18 January 2010Hello, 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.
Mohammed Asif
(CA Final Student)
(110 Points)
Replied 18 January 2010
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
Simranjeet Singh
(Proprietor at S Simranjeet & Associates Company Secretaries)
(4396 Points)
Replied 19 January 2010
Thanks Asif bhai jaan for your reply.
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