Question

ABC Corporation has declared a rights offering to stockholders of record on Friday, December 10th. Under the offer, shareholders need 10 rights to subscribe to 1 new share at a price of $19. Fractional shares can be rounded up to purchase 1 full share. As of the ex date, the stock is trading at $29. The value of the right is:

Answer 1

The value of a right is $1

Step-by-step explanation:

10 rights are needed to buy 1 share at the price of $19

Value of total rights = $29 - $19 =$10

Value of a right =
`(10)/(10)` = $1