Question

An investor owns 60 shares of common stock of a company issuing new shares in a rights offering. The stock trades at $12 per share. The company requires that investors must submit 9 rights plus $10 to purchase a new share of stock. Fractional shares automatically become whole shares. How many additional shares may the investor purchase and what is the amount of money that needs to be paid for the new shares

Answer 1

7 shares and $70

Step-by-step explanation:

The computation is shown below:

The additional shares is

= 60 shares ÷ 9

= 7 shares

And, the amount of money that have to be paid is

= Additional shares × purchase price

= 7 × $10

= $70

Therefore the same would be considered relevant