Question
Question 13 4 pts Which of the following statement(s) Is true? (Select the correct option from below the following statements. (i) The theoretical ex-rights price Is the market value of shares (ii) The theoretical ex -rights price is the market share price, theoretically speaking after a rights issue (iii) The theoretical ex-rights price Is the Internal price of shares (iv) The theoretical ex-rights price is the price Investors wish to pay for shares a) (I) only b) (II) only
Answer
4.1
(196 Votes)
Lewis
Master · Tutor for 5 years
Answer
b) (ii) only.
Explanation
"Theoretical ex-rights price" is a valuation concept and calculation financial analysts use to predict the price levels of stocks after they go "ex-rights". The term refers to stock market trading started on or after the date on which a security trades without the rights attached. More straightly, the theoretical ex-rights price provides the theoretical cost per share for an entire batch of shares subsequent to new shares being taken into account, which are expected to decrease the cost per share. Therefore, Only statement (ii) "The theoretical ex-rights price is the market share price, theoretically speaking, after a rights issue" accurately describes what the "theoretical ex-rights price" refers to. Other statements like (i), (iii) and (iv) are not aligned with the definition of "theoretical ex-rights price".