Which of the Following Is Not True About Rights Trading

question 4

Multiple Choice

Which of the following is not true about rights trading on organized exchanges?

• A) Rights trade at low prices
• B) Continuous trading of a right for long periods of time (similar to stocks)
• C) Rights trading tends to surge during bull markets
• D) The period during which rights may be bought,sold,or exercised is usually four to six weeks after what is termed the ex-rights date.

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Definitions:

Net Cash Flow

The variance between the cash coming into and going out of a business within a given timeframe.

Discount Rate

The interest rate used to discount future cash flows to their present value, enabling comparison of the value of investments made at different times.

Net Present Value

A method used to evaluate investments by calculating the present value of expected future cash flows minus the initial investment cost.

Cash Inflows

Refers to the money received by a company during a particular period, including revenues from sales, investments, and financing activities.