If the Old Stock Price Is $50/share and Ex-Rights Price

question 52

Multiple Choice

If the old stock price is $50/share and ex-rights price is $49/share then the value of a right is:

• A) $50/right
• B) $49/right
• C) $1/right
• D) Cannot be determined

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Definitions:

Marginal Cost

The added cost of producing one additional unit of a product.

Monopsony

Monopsony describes a market situation in which a single buyer substantially controls the market as the major purchaser of goods and services.

Competitive Price

The price of a product or service determined by the supply and demand within a competitive market, ensuring no significant profit or loss.

Marginal Value Curve

A graph that shows the additional value or utility gained from consuming one more unit of a good or service.