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Unformatted text preview: Example - AEP Corp currently has 11 million shares outstanding. The market price is $24/sh. AEP decides to raise additional funds via a 1 for 11 rights offer at $22 per share. If we assume 100% subscription, what is the value of each right? Rights Issue (not fully subscribed) Suppose the previous rights offer is only 50% subscribed. What is the value of the right now? Suppose you had 11 shares (pre-rights offer). What is your gain/loss if you exercised the right? What if you did not exercise the right?...
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- Fall '11
- Finance, $1.83, rights issue, $23.83, AEP Corp