Theoretical Ex-Rights Price

AAA

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

    Shares of stock that are trading but no longer have rights attached ...
  3. Ex-Warrant

    The trading of shares when a warrant has been declared but not ...
  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 ...
Related Articles
  1. What does
    Forex

    What does "outrights" mean in the context ...

  2. Understanding Rights Issues
    Options & Futures

    Understanding Rights Issues

  3. War's Influence On Wall Street
    Bonds & Fixed Income

    War's Influence On Wall Street

  4. The Basics Of Outstanding Shares And ...
    Investing Basics

    The Basics Of Outstanding Shares And ...

comments powered by Disqus
Hot Definitions
  1. Last In, First Out - LIFO

    An asset-management and valuation method that assumes that assets produced or acquired last are the ones that are used, sold ...
  2. Ghosting

    An illegal practice whereby two or more market makers collectively attempt to influence and change the price of a stock. ...
  3. Elasticity

    A measure of a variable's sensitivity to a change in another variable. In economics, elasticity refers the degree to which ...
  4. Tangible Common Equity - TCE

    A measure of a company's capital, which is used to evaluate a financial institution's ability to deal with potential losses. ...
  5. Yield To Maturity (YTM)

    The rate of return anticipated on a bond if held until the maturity date. YTM is considered a long-term bond yield expressed ...
  6. Net Present Value Of Growth Opportunities - NPVGO

    A calculation of the net present value of all future cash flows involved with an additional acquisition, or potential acquisition. ...
Trading Center