NISM Certifications · NISM-Series-XV: Research Analyst · Corporate Actions
Rani Pharma has 1 crore shares trading cum-rights at ₹220. It offers rights shares in the ratio 1:4 at ₹120 per share. What is the theoretical ex-rights price per share?
The theoretical ex-rights price is ₹200. Four old shares worth ₹880 plus one rights share paid at ₹120 give total value ₹1,000 across five shares, so the average value per share after the rights issue is ₹200.
- A₹200
- B₹170
- C₹196Correct
- D₹180
Explanation
Take 4 old shares worth 4 x 220 = 880 and add 1 new share at 120, giving total 1,000 for 5 shares. TERP = 1,000 / 5 = ₹200. Recheck: 880 + 120 = 1,000, so the answer is ₹200, not ₹196. The ₹196 option is a miscalculation that wrongly divides by 5.1.
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