Tricki Corp stock sells for $70 rights-on, and the subscription price is $60. Te
ID: 2532058 • Letter: T
Question
Tricki Corp stock sells for $70 rights-on, and the subscription price is $60. Ten rights are required to purchase one share. Tomorrow the stock of Tricki will go ex-rights. What is the price of Tricki expected to be when it begins trading ex-rights? (Round your answer to 2 decimal places.)
$71.09
$72.09
$69.09
$68.09
Lucas, Inc. earned $11 million last year and retained $4 million. Lucas has 12 million shares outstanding, and the current price of Lucas shares is $20 per share. What is the payout ratio? (Round your answer to the nearest whole percent.)
59%
64%
69%
67%
A 2-for-1 stock split is declared. In this case, which of the following statements is true?
The cash account declines.
The common stock account rises.
The retained earnings fall.
The par value of the common stock is reduced.
$70
$13
$52
$65
Tricki Corp stock sells for $70 rights-on, and the subscription price is $60. Ten rights are required to purchase one share. Tomorrow the stock of Tricki will go ex-rights. What is the price of Tricki expected to be when it begins trading ex-rights? (Round your answer to 2 decimal places.)
Explanation / Answer
QUESTION-1
Tricki Corp stock sells for $70 rights-on, and the subscription price is $60. Ten rights are required to purchase one share. Tomorrow the stock of Tricki will go ex-rights. What is the price of Tricki expected to be when it begins trading ex-rights?
R = Mo- S
= $70 - $60= $0.91
$70 - $0.91
= $69.09
QUESTION-2
Lucas, Inc. earned $11 million last year and retained $4 million. Lucas has 12 million shares outstanding, and the current price of Lucas shares is $20 per share. What is the payout ratio?
Total Earning = $11 Million
Retained = $4 Million
Paid = 11-4 = $7 Million
So payout ratio = (7/11)*100 = 64%
QUESTION-3
A 2-for-1 stock split is declared. In this case, which of the following statements is true?
“The par value of the common stock is reduced.”
QUESTION-4
A convertible bond is currently selling for $746. It is convertible into 13 shares of common which presently sell for $52 per share. The conversion premium is
Conversion Premium = Current selling price of Bond – Conversion Value
= $746 – (13 x $52)
= $746 - $676
Conversion Premium = $70
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