Need help with pg 77 example 1 in lecture notes

PFPeer Far6y ago

In part D, I can't understand the fraction part. Please help me understand the logic behind using price before/price after and then multiplying it with the others to get weighted average? Also, what do you mean by theoretical ex-rights price for price after?

P2-D2Tutor6y ago#1

I'd not worry too much about the logic as it is far too complicated and isn't required for the exam. The price after is also referred to as the theoretical ex-rights price. Theoretical as it is calculated on an expectation of the price, ex-rights as it is after the rights issue. Thanks