Neco 2017 Commerce Question 31
Practice objective / multiple choice question 31 from the 2017 Neco Commerce examination.
A company's ordinary shares are trading at \(\text{₦}150\) per share. The company announces a 1‑for‑4 rights issue at a subscription price of \(\text{₦}120\). Existing shareholders are entitled to one right for each 4 shares held. If the rights are fully exercised and the new shares are immediately listed at the subscription price, what is the theoretical ex‑rights price of the shares? Additionally, an investor who owned 200 shares before the rights issue sells all his shares (including the newly acquired rights shares) at the ex‑rights price. What is his total profit or loss compared to the original market value of his holdings?
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About This Question
This is Neco 2017 Commerce Question 31. It is one of the objective questions from the 2017 Neco Commerce examination.
Difficulty level: Hard .
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