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sir I’m a bit confuse
the sale of rightssuppose vita has the rights of 500 new shares (1 for 4 out of 2000 existing) at $3
current market price $5
so TERP = $ 4.60
If I want to buy 3000 shares of that co, I can buy it at $4.60 = paying $13,800
or I can buy 500 shares from vita (if she sell her rights) at $ 1.60 (value of rights) and have the right of buying them at $3 AND the other 2500 shares at $4.60 based on new MV = so paying in total $13,900
why on earth would I bother the second option? if I’m benefiting from buying directly from S.E at $4.60 gaining $100 instead doing all that round in second option above
You have calculated the payment for the second of your two options wrongly.
Buying rights from Vita etc., adds up to $13,800 – not $13,900!! Check your arithmetic again 🙂
In theory, the end result will be the same whatever we do.
please explain your calcultion sir
i did 500 shares * $1.60 = 800 * $3 = $2400
+
2500 * $4.60
total 13900$Why do you have 800 x $3?
If you buy 500 rights from Vita (you do not buy shares from her, you buy rights) then you have the right to buy 500 shares (not 800)!!
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