An Investor Exercises the Right to Buy One Additional Share

question 65

Multiple Choice

An investor exercises the right to buy one additional share at $20 for every five shares held.How much should each share be worth after the rights issue if they previously sold for $50 each?

• A) $35.00
• B) $41.67
• C) $45.00
• D) $46.00

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Definitions:

Long-Run Equilibrium

A state in which all adjustments to any economic changes have been made, allowing for full resource flexibility and market adjustments.

Profit-Maximizing Price

The price level at which a firm maximizes its profits, typically found where marginal cost equals marginal revenue.

Panel

A group of people gathered to discuss, analyze, or judge a particular topic or issue, often in the context of a conference or public debate.

Economic Profit

The total revenue minus the opportunity costs of all inputs, a measure that considers both explicit and implicit costs.