IGHTS ISSUE
1. The nominal value of the equity shares of a company is 10 and the current market price
is 40. The company issues right shares at the rate of 1 equity share for every 2 existing
shares held, the right shares being issued at a premium of 10%.
From the above, calculate the value of the right.
Ans. [ 9.67).
Progressive Corporation is planning to raise funds by making rights issue of equity shares
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A rights offering is when a company issues to its existing shareholders a right to buy additional shares in the company. The company offers its shareholder a specific number of shares at a special price.
The company will also set a time limit for the shareholder to buy these shares. The shares are often offered at a discounted price to the existing shareholders.
In a rights offering, the subscription price at which each share may be offered is generally at a discount to the current market price. Rights are often transferable, allowing the holder to sell them in the open market.
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