Knight inventory systems inc has announced a rights offer, Ask an Expert

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Knight Inventory Systems Inc., has announced a rights offer. The company has announced that it will take three rights to buy a new share in the offering at a subscription price of $45.

At the close of business the day before the ex-rights day, the company's stock sells for $80 per share.

The next morning, you notice that the stock sells for $60 per share and the rights sell for $2 each.

What is the value of the stock ex-rights? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

What is the value of a right? Are the rights underpriced or overpriced?

What is the amount of immediate profit you can make on ex-rights day per share?

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92805047

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