In: Finance
Mitsi Inventory Systems, Inc., has announced a rights offer. The company has announced that it will take two rights to buy a new share in the offering at a subscription price of $60. At the close of business the day before the ex-rights day, the company’s stock sells for $90 per share. The next morning, you notice that the stock sells for $70 per share and the rights sell for $3 each. |
What price should the stock sell for ex-rights? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) |
What is the value of one right? (Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.) |
Are the rights underpriced or overpriced? |
Underpriced
Overpriced
What is the amount of instant profit you can make on ex-rights day per new share? (Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.) |
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