Nine rights are necessary to purchase one share of Fogel stock at $50. A right sells for $4. The ex-rights value of Fogel stock is
Goodwill
To determine the ex-rights value of the Fogel stock, we need to consider the rights and their cost.
Given:
Number of rights needed to purchase one share of Fogel stock = 9
Cost of one right = $4
Price of one Fogel stock = $50
To calculate the ex-rights value, we need to deduct the cost of the rights from the stock price.
Total cost of all the rights needed = Number of rights * Cost per right = 9 * $4 = $36
Ex-rights value = Stock price - Total cost of rights
Ex-rights value = $50 - $36 = $14
Therefore, the ex-rights value of the Fogel stock is $14.
To determine the ex-rights value of Fogel stock, we need to understand the concept of a right. A right is a type of financial instrument that gives existing shareholders the opportunity to purchase additional shares of a company's stock at a discounted price. In this case, it takes nine rights to purchase one share of Fogel stock.
Given that each right sells for $4, we can calculate the total cost for nine rights to purchase one share of Fogel stock:
9 rights * $4 per right = $36
Now that we know the cost of the nine rights, let's calculate the total cost to purchase one share of Fogel stock with the rights included:
Cost of stock with rights = Cost of rights + Stock price
Cost of stock with rights = $36 + $50
Cost of stock with rights = $86
Therefore, the ex-rights value of Fogel stock is $86.