% of rights resulting from an issue

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May 29, 2015 at 2:09 pm #250233
gabrielalexandra
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Please advise the procedure to the following example:

The share price of CP plc is $4 per share. They announced a 1 for 5 rights issue at $3.10 p/share.
What % of the rights offered to a shareholder does the shareholder need to take up so as to have no net cash flow resulting from the issue?

Thank you
May 29, 2015 at 3:42 pm #250267
John Moffat
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You need to watch the lecture on Rights Issues (it is under the heading Sources of finance – equity) because I explain the procedure for doing this in that lecture.
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