Calculate the effect of the rights issue on the market price


Problem

A company announces a rights issue. For every four shares owned, one new share may be purchased by a shareholder at a price of E50. The stock's current stock market price is $80. Calculate the effect of the rights issue on the market price of the share.

What actions are available to the shareholders? Discuss.

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Microeconomics: Calculate the effect of the rights issue on the market price
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