Knight Inventory Systems, Inc., has announced a rights offer. The company has announced that it will take three rights to buy a new share in the offering at a subscription price of $50. At the close of business the day before the ex-rights day, the company’s stock sells for $90 per share. The next morning, you notice that the stock sells for $65 per share and the rights sell for $3 each.
What is the value of the stock ex rights? (Round your answer to 2 decimal places. (e.g., 32.16))
What is the value of the rights?
What is the amount of instant profit you can make on ex rights day per share?