A customer owns 210 shares of ABC common stock. ABC declares a rights offering, with the terms being that for every 20 rights te

Question

3 years ago

10

A customer owns 210 shares of ABC common stock. ABC declares a rights offering, with the terms being that for every 20 rights te

ndered, 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?

Business

1 answer:

snow_tiger [21] · Answer 1 · 2021-11-13T02:36:02+03:00

Answer:

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