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:

Use Of Debt

The practice of borrowing funds to finance activities, investments, or purchases, often as a strategic financial decision.

Current Ratio

A liquidity ratio that measures a company's ability to pay short-term obligations or those due within one year.

Liquid Assets

Assets that can be quickly and easily converted into cash without significant loss in value.

Liabilities

Financial obligations or debts that an individual or organization owes to others.