When a Share Goes Ex-Rights,assuming Everything Else Remains the Same,its

question 96

Multiple Choice

When a share goes ex-rights,assuming everything else remains the same,its price should:

• A) increase, as the company no longer has the right to make the shareholder convert.
• B) decrease, as the shareholder is losing an option.
• C) remain the same, as the market knows about it in advance.
• D) increase, as a successful rights issue will raise a large amount of cash.

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Definitions:

Academic Journal

A professional publication that presents original research, reviews, or scholarly articles in a specific academic field.

Unwanted Effect

An undesirable or harmful outcome resulting from an action or medication.

Negative Therapy Effect

An adverse outcome in psychotherapy where the patient's symptoms worsen instead of improving.

Biopsychosocial Approach

A holistic perspective for understanding human health and illness that integrates biological, psychological, and social factors.