What is the loss to non-participating investors


Assume a rights offering for a firm that is worth $500 million and offers its shareholders to buy one extra share for each share that they already own. The "discount" price for the new shares is 1/5 the price of the current shares. Assume that half the investors do not participate. What is the loss to non-participating investors (shares) and the gain to participating investors (shares)?

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Finance Basics: What is the loss to non-participating investors
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