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Right Issue

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FM Exams › Right Issue

  • This topic has 3 replies, 2 voices, and was last updated 12 years ago by AvatarJohn Moffat.
Viewing 4 posts - 1 through 4 (of 4 total)
  • Author
    Posts
  • November 29, 2013 at 5:00 pm #148495
    Avatarmoxen307
    Member
    • Topics: 2
    • Replies: 4
    • ☆

    Dear Sir Moffat,
    If Market share price falls below the face value, what price the right issue would be? Lower than Market SP ?

    November 29, 2013 at 6:29 pm #148518
    AvatarJohn Moffat
    Keymaster
    • Topics: 57
    • Replies: 54836
    • ☆☆☆☆☆

    The nominal value (face value) is not relevant at all.

    The rights issue can legally be at any price the company wants. However it will be below the current market value of the shares, otherwise nobody will want to buy the rights – it would be cheaper for them to buy the shares on the stock exchange.

    November 29, 2013 at 6:53 pm #148527
    Avatarmoxen307
    Member
    • Topics: 2
    • Replies: 4
    • ☆

    Simple Logic. Thanks

    November 30, 2013 at 2:39 pm #148611
    AvatarJohn Moffat
    Keymaster
    • Topics: 57
    • Replies: 54836
    • ☆☆☆☆☆

    You are welcome 🙂

  • Author
    Posts
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