Determining the trading ex-rights


Problem:

Tricki Corp stock sells for $45 rights-on, and the subscription price is $35. Ten rights are required to purchase one share. Tomorrow the stock of Tricki will go ex-rights.

Required:

Question: What is the price of Tricki expected to be when it begins trading ex-rights?

  • $47.23
  • $44.00
  • $44.09
  • $45.00

Note: Please provide through step by step calculations.

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Accounting Basics: Determining the trading ex-rights
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