A shareholder has 1,000 shares in Finn Plc., which have a current market value of...
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Finance
A shareholder has 1,000 shares in Finn Plc., which have a current market value of 80 pence per share. A 1 for 5rights issue is announced at a price of 50 pence per share.
If the value of the company increases by the amount of the new capital raised, what is the ex-rights value of the companys shares and the value of the rights?
Explain in what circumstances the shareholders total wealth will remain the same, whether s/he takes up or sells the rights.
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