Theoretical Ex-Rights Price

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DEFINITION of 'Theoretical Ex-Rights Price'

The market price that a stock will theoretically have following a new rights issue. Although the stock price is not likely to change immediately following the new rights issue, it will change as the rights expiration date approaches.

INVESTOPEDIA EXPLAINS 'Theoretical Ex-Rights Price'

The theoretical ex-rights price is based on the company's market capitalization and the number of shares outstanding. For example, if a new rights offering gives buyers the right to purchase 25% more shares than there are currently outstanding, the market price of the stock will theoretically be 25% less in the future than it is today (assuming 100% of the new rights will be exercised by the holders).

RELATED TERMS
  1. Warrant

    A derivative security that gives the holder the right to purchase ...
  2. Ex-Rights

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  3. Ex-Warrant

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  4. Market Capitalization

    The total dollar market value of all of a company's outstanding ...
  5. Rights

    A security giving stockholders entitlement to purchase new shares ...
  6. Rights Offering (Issue)

    An issue of rights to a company's existing shareholders that ...
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