Stock Rights Issue
rights are offers that allow existing stockholders to buy additional shares at a predetermined price for a set time period. usually the number of shares the investor can purchase are in proportion to the amount of stock he or she already owns. ? owns 10 shares of lydia's lighting company, currently valued at $100 each. the business is extending a one for two rights issue, allowing ? to buy up to five more shares at below market price of $70 per share. this sounds like a great deal compared to the original market price of $100 a share. however, the rights issue has also increased the number of lydia's lighting shares in the market, leading to a delusion in each share's value. the value of ?'s 15 shares will be $90 per share after he exercises his rights. ten shares times $100 plus five shares times $70 divided by 15 shares. this after rights value of $90 is called the ex-rights price. ? still is getting a discount, although a smaller one than it first appears ? his theoretical ex-rights price is $90 not $100. ? does not have to exercise these rights. he could let them expire. alternately, he could trade them to another investor before the expiration date. why do companies offer rights. sometimes tapping existing shareholders may be the best way to raise additional capital if they have difficulty attracting outside investors. for this reason, heavily indebted businesses will sometimes use a rights issue to pay down their obligations. before deciding whether to trade or exercise a right, it's a good idea to evaluate how the company is using its new capital and consider whether your added investment will grow over the long run.
- stock rights issue・・・新株予約権無償割当→https://ja.wikipedia.org/wiki/%E3%83%A9%E3%82%A4%E3%83%84%E3%82%A4%E3%82%B7%E3%83%A5%E3%83%BC