RUReady Ltd Wishes to Raise $20 Million

question 93

Multiple Choice

R.U.Ready Ltd wishes to raise $20 million.If the subscription price is $5, the current share price is $7.50, and there are 8 million shares outstanding, what is the value of a right?

• A)$0.63
• B)$1.25
• C)$1.67
• D)$1.88
• E)None of these.

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Definitions:

Pollution

The presence or introduction into the environment of substances or things that have harmful or poisonous effects.

Pigouvian Subsidy

A financial incentive given by the government to encourage activities that have positive externalities, or beneficial effects on society that are not reflected in the market price.

Free Market

An economic system where prices for goods and services are determined by the open market and consumers, with minimal government intervention.

Optimal Pigouvian Tax

A type of tax designed to correct the negative externalities of a market activity, set at a level that equates the marginal social cost of the externality with the marginal private cost.