A customer owns 210 shares of ABC common stock. ABC declares a rights offering, with the terms being that for every 20 rights tendered, a shareholder may purchase one additional share at $20 per share. Any fractional rights holding may be rounded up to buy an additional share. If this shareholder wishes to subscribe, which statement is TRUE?

Question

Business

Harper Cummings

14 January, 00:19

A customer owns 210 shares of ABC common stock. ABC declares a rights offering, with the terms being that for every 20 rights tendered, a shareholder may purchase one additional share at $20 per share. Any fractional rights holding may be rounded up to buy an additional share. If this shareholder wishes to subscribe, which statement is TRUE?

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Answers (1)

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Deja · Answer 1

B. The shareholder can buy a maximum of 11 shares by paying $220

Explanation:

There is an option below the question ask for details:

The computation is shown below:

First, we have to determine the fraction value which is shown below:

= Total shares : rights shares

= 210 shares : 20 shares

= 10.5 shares rounded off = 11 shares

Now for additional shares, the total value would be

= Number of shares * per share value

= 11 shares * $20

= $220