Question
A company announces rights issue in the ratio of 1:4. The face value of the share is Rs.10 and market value is Rs.70. If the rights issue is done at Rs.50, what is the value of the right?
Method 2: Find theoretical ex-rights price 
Therefore, Value of right = Market price – Theoretical ex-rights price = ₹70 – ₹66 = ₹4 More Basic Accounting Concepts Questions
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