Dill Owns Five Per Cent of the Outstanding Shares in Pickle

question 13

Multiple Choice

Dill owns five per cent of the outstanding shares in Pickle Ltd,which has just announced a one for five rights issue with a subscription price of $1.90.The current 'cum rights' price for Pickle shares is $2.20.The number of outstanding shares in Pickle Ltd is 5000.Calculate the theoretical ex-rights share price.

• A)$2.58
• B)$2.25
• C)$2.10
• D)$2.15

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