Mr. and mrs. anderson own three shares of magic tricks corporation's common stock. the market value of the stock is $72. the andersons also have $60 in cash. they have just received word of a rights offering. one new share of stock can be purchased at $60 for each three shares currently owned (based on three rights).
a. what is the value of a right?
b. what is the value of the andersons' portfolio before the rights offering? (portfolio is this question represents stock plus cash.)
c-1. compute the diluted value (ex-rights) per share.
c-2. if the andersons participate in the rights offering, what will be the value of their portfolio, based on the diluted value (ex-rights) of the stock?
d. if they sell their five rights but keep their stock at its diluted value and hold on their cash, what will be the value of their portfolio?
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Mr. and mrs. anderson own three shares of magic tricks corporation's common stock. the market value...
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