1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
mrs_skeptik [129]
3 years ago
14

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 $53. At the close of business the day before the ex-rights day, the company’s stock sells for $80 per share. The next morning, you notice that the stock sells for $65 per share and the rights sell for $2 each.
Required:
a. Are the stock and the rights correctly priced on the ex-rights day?
b. Describe a transaction in which you could use these prices to create an immediate profit.
Business
1 answer:
bekas [8.4K]3 years ago
3 0

Answer:

a. Are the stock and the rights correctly priced on the ex-rights day?

stock price at ex-right = [(3 x $80) + $53] / 4 = $73.25

cost of ex-right = $80 - $73.25 = $6.75

the rights are underpriced since they are sold at $2, and they should sell at $6.75

b. Describe a transaction in which you could use these prices to create an immediate profit.

You can purchase 3 rights at $6 and then pay subscription price ($53) and you would have an stock at $59. Your profit = $65 - $59 = $6 per stock.

You might be interested in
Which of the following weakens the government control in the marketplace?
diamong [38]
The appropriate response is deregulation. Deregulation, the omission of some administration controls over a market, it permitted or constrained firms to contend by dispensing with many value controls and obstructions to section. The objective of deregulation is to promote competition.
5 0
3 years ago
Read 2 more answers
Issued a check for $1,010 to pay the monthly rent. Issued a $1,300 check to pay a creditor on account. Purchased new equipment f
kodGreya [7K]

Answer:

Issued a check for $1,010 to pay the monthly rent

Account                         Debit          Credit

Rent Expense               $1,010

Bank                                                  $1,1010

Issued a $1,300 check to pay a creditor on account.

Account                         Debit          Credit

Creditor                        $1,300

Bank                                                  $1,300

Purchased new equipment for $390 and paid $110 immediately by check with the remainder due in 30 days.

Account                         Debit          Credit

Equipment                    $390

Bank                                                  $110

Accounts Payable                            $280

Provided services on credit in the amount of $860.          

Account                         Debit          Credit

Service Revenue                              $860

Accounts Receivable    $860

Performed services for cash in the amount of $1,320.

Account                         Debit          Credit

Service Revenue                              $1,320

Cash                              $1,320

The owner made an additional investment of $5,600 in cash and $1,050 in equipment.

Account                         Debit          Credit

Cash                              $5,600

Equipment                    $1,050

Capital                                              $6,650    

Purchased $190 worth of supplies on credit.  

Account                         Debit          Credit

Supplies                         $190

Accounts Payable                            $190

Sent a $105 check to the utility company to pay the monthly bill.

Account                         Debit          Credit

Utilities Expense           $105

Bank                                                  $105

Collected $650 from credit customers.

Account                         Debit          Credit

Cash                              $650

Accounts Receivable                       $650                                            

   

7 0
3 years ago
A(n) _______ is an arrangement in which a third party promises to be secondarily liable for the payment of another's debt.
Gre4nikov [31]
A. guaranty arrangement
The third party is providing a guarantee that the lender will recover the debt regardless of the borrower's reputation to pay.
3 0
3 years ago
A multinational strategy entails having a separate strategy for each nation in which a company markets its products
Studentka2010 [4]
This statement above would be known to be called a (true/false) question, and based on my information, this statement above would be known to be a "true" statement. This would be true in many marketing companies that would be out there. They would always contain a strategy for each nation, and therefore this would then resolve to which a company would produce it's market productions.

Your answer: True
4 0
3 years ago
Suppose the central bank implements expansionary monetary policy where the money supply increases. Which of the following will t
natka813 [3]

Answer:

D they both will increase

Explanation:

Goodluck on that.

4 0
2 years ago
Other questions:
  • Rayya Co. purchases a machine for $159,600 on January 1, 2019. Straight-line depreciation is taken each year for four years assu
    14·1 answer
  • Tim rutherford is thinking about starting a firm in the medical equipment industry. in the industry analysis tim has been? condu
    6·2 answers
  • When a business asks "What business are we in?" they are: a. conducting an environmental analysis. b. defining their business mi
    15·1 answer
  • Serge is a landscape architect who manages a team of 12 employees who work primarily on commercial landscaping projects. Serge i
    8·1 answer
  • Each individual asset’s weight in the portfolio is found by:
    13·1 answer
  • The New York Stock Exchange (NYSE) originated as: a financial market where nearly 100 million shares of stock are traded every b
    8·1 answer
  • Which types of teams most are appropriate when the primary goal is innovation and the organization needs flexibility to cope wit
    12·1 answer
  • What product are you making to bring Toys R Us back?
    6·1 answer
  • Ann lives in Princeton, New Jersey, and commutes by train each day to her job in New York City (20 round trips per month). When
    13·1 answer
  • You work for a Public Relations Consultancy that has been approached by the German company DHL to assist with their Public Relat
    5·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!