Gce Model Questions Vol1 2018 Commerce Question 49

Practice objective / multiple choice question 49 from the 2018 Gce Model Questions Vol1 Commerce examination.

Gce Model Questions Vol1 2018 Commerce Objective / Multiple Choice Hard Difficulty
Question 49 GCE_MODEL_QUESTIONS_VOL1 • 2018 • COMMERCE • objective

A company's shares are currently trading at \(150\) naira per share. The company announces a 1‑for‑4 rights issue at a subscription price of \(120\) naira. Existing shareholders may buy one new share for every four held. The company also declares a dividend of \(9\) naira per share, payable after the rights issue. Assuming the rights are fully exercised and the market price adjusts immediately to the theoretical ex‑rights price, determine: (a) the theoretical ex‑rights price per share; (b) the dividend yield based on that ex‑rights price; (c) the new earnings per share (EPS) if the original EPS was \(30\) naira and total earnings remain unchanged.

Answer Options

A. (a) 138 naira per share; (b) 6.94 %; (c) 26 naira per share
B. (a) 142 naira per share; (b) 6.00 %; (c) 22 naira per share
C. (a) 150 naira per share; (b) 5.00 %; (c) 30 naira per share
Correct Answer D. (a) 144 naira per share; (b) 6.25 %; (c) 24 naira per share
Correct Answer
D
Correct Option:
(a) 144 naira per share; (b) 6.25 %; (c) 24 naira per share

About This Question

This is Gce Model Questions Vol1 2018 Commerce Question 49. It is one of the objective questions from the 2018 Gce Model Questions Vol1 Commerce examination.

Difficulty level: Hard .

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