Question

stock sells for $100 rights-on, and the subscription price is $90. Ten rights are required to purchase one share. Tomorrow the stock of Tricki will go ex-rights. What is Tricki’s expected price when it begins trading ex-rights?

Answer 1

$99.09

Step-by-step explanation:

Calculation for What is Tricki's expected price when it begins trading ex-rights

Using this formula

Expected price=Stock rights-on- [ (Stock rights-on-Subscription price)÷(10 rights+ One share)]

Let plug in the formula

Expected price=$100-[($100-$90)÷(10+1)]

Expected price=$100-($10÷11)

Expected price=$100-$0.91

Expected price=$99.09

Therefore Tricki's expected price when it begins trading ex-rights will be $99.09