High Voltage Plc Has 1 Million Ordinary Shares with a Nominal

question 14

Multiple Choice

High Voltage plc has 1 million ordinary shares with a nominal value of 50 pence and a market value of £4.00 each.The company makes a rights issue,offering existing shareholders one share for every 5 they already hold at a price of £3.50.After the rights issue,what is the theoretical value of the shares?

• A) £3.50
• B) £3.92
• C) £4.70
• D) £3.96

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Definitions:

Corporate Governance

The system of rules, practices, and processes by which a company is directed and controlled, focusing on the relationships among the management, board of directors, shareholders, and other stakeholders.

Double Taxation

A taxation principle where income is taxed at both the corporate level and again at the individual level on dividends received.

Partnership Agreement

A formal arrangement between two or more parties to manage and operate a business and share its profits or losses in accordance with the terms set out in the agreement.

Bylaws

Internal rules adopted by an organization or corporation to govern its actions and decisions.