Question

    A company announces a 1:4 rights issue at ₹50 per

    share when market price is ₹70. What is the value of right?
    A ₹10 Correct Answer Incorrect Answer
    B ₹5 Correct Answer Incorrect Answer
    C ₹4 Correct Answer Incorrect Answer
    D ₹20 Correct Answer Incorrect Answer

    Solution

    Theoretical ex-right price = [(4×70 + 1×50)/5] = ₹66 Value of right = ₹70 – ₹66 = ₹4

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