Assuming Everything Else Is Constant,when a Stock Goes Ex-Rights the Stock

question 46

Multiple Choice

Assuming everything else is constant,when a stock goes ex-rights the stock price should:

• A)decrease since the stockholder is losing an option.
• B)increase since the corporation no longer has the right to force the stockholder to convert.
• C)remain the same since an efficient market would anticipate this change.
• D)remain constant as shareholder value is unaffected by a rights offering.
• E)decrease by the amount of the tax applicable to the right.

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