What Was the Market Price of a Share of Stock

question 111

Multiple Choice

What was the market price of a share of stock before a rights issue if one share of new stock could be purchased at $100 for every four shares that were previously owned? The stock price after the successful rights issue was $200.

• A)$150
• B)$225
• C)$241
• D)$250 4x + 100 = $200 x 5
• 4x/4 = 900/4

---

Definitions:

Common Stock

A form of corporate equity ownership, a type of security representing an ownership share in a corporation.

Common Stock Subscribed

Common stock subscribed refers to shares that investors have committed to purchase but have not yet been issued by the company.

Par Value

The nominal or face value of a bond, stock, or coupon as stated by the issuer.

Preferred Stock

A class of ownership in a corporation with a specified dividend that must be paid out before dividends to common stockholders.