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nominal value

R

Robert

Very Active Member
A company ordinary share have a nominal value of 25p. The current market price of a share is 75p. The directors plan a right issue of new shares. What would be the most likely right issue price?
What would be the answer for this question? Is it fixed at 65p and is nominal value important in this question?
 
Hi
The nominal value sets a minimum price for the rights issue, but normally the rights issue price is set by reference to the market price. As investors could just buy shares in the market at the market price, likely that issue price < current market price.
Hope this helps
Lynn
 
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