What is Market price after issue?
- After the announcement of a rights issue there is a tendency for share prices to fall.
- The temporary fall is due to uncertainty about:
- Consequences of the issue
- Future profits
- Future dividends.
- After the actual issue the market price will normally fall again because:
- There are more shares in issue (adverse affect on earnings per share), and
- New shares were issued at market price discount.
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