Question 2 (a) Mirvac Corporation is in the process of selling ordinary shares t

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Question 2 (a) Mirvac Corporation is in the process of selling ordinary shares through a rights issue Prior to the new issue, the firm had 5 million ordinary shares outstanding. Through the rights issue, it plans to issue an additional 1 million shares at a subscription price of $3. After the shares went ex-rights, the $4. What was the price of ABC market price was Corporation's ordinary shares just prior to the rights issuer (b) The following quotes refer to are obtained from a dealer in Sydney. The bid and ask quotes AUD. the rate at which the dealer buys and sells foreign currencies to 1 Contract Foreign Currency (AUD) Country (Currency Spot 30-day 90-day Spot 73.78/72.48 73.41/72.06 72.58/71.23 1.1043/1.1030 Japan (JPY) Canada (CAD) 30-day 1.1023/1.1008 90-day 1.0980/1.0963 You own AUD 10,000. The spot exchange rate quote in Tokyo is JPY75.20/73.90 per AUD. gain (loss) in dollars? Avre artstrane corlart ssibleet up an arbitrage scheme with your capital. Whatis the

Explanation / Answer

(a)Price Ex- Right = (Price including Right+Subscription Amount)/No of shares after right

4 = (Price including right +3000000)/6000000

21000000 = Price including Right*5000000 shares

Therefore, Price of common shares just prior to Right Issue = $4.2

(b)We have 10,000 AUD

Spot Exchange rate in Tokyo 1AUD = 75.20/73.90 JPY

On selling 10,000 AUD, we receive = 73.90*10000 = 739000

Buying AUD from Japan on the same day 739000/73.78 = 10016.26 AUD

Hence, gain = 16.26 AUD

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