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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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  1. 14 January, 03:15
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    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
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