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. Passive ETF

    One of two types of exchange-traded funds (ETFs) available for investors. Passive ETFs are index funds that track a specific ...
  2. Walras' Law

    An economics law that suggests that the existence of excess supply in one market must be matched by excess demand in another ...
  3. Market Segmentation

    A marketing term referring to the aggregating of prospective buyers into groups (segments) that have common needs and will ...
  4. Effective Annual Interest Rate

    An investment's annual rate of interest when compounding occurs more often than once a year. Calculated as the following: ...
  5. Debit Spread

    Two options with different market prices that an investor trades on the same underlying security. The higher priced option ...
  6. Odious Debt

    Money borrowed by one country from another country and then misappropriated by national rulers. A nation's debt becomes odious ...
Trading Center