[Anonymous]

Hi,

Could somebody please help me with this?

Assume a client purchased 100 shares at a price of $22 per share, or a total cost of $2200

If the investee issues the stock rights for each existing share, and FMV of the stock and the stock rights on the record date are $24 per share and $6 per right, respectively, then the right should be allocated 6 / (24+6) = 20% of the carrying value of securities:

Investment in rights 440

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Investment in stock 440

This is not a question really, this is a paragraph in Roger’s book I can’t make sense of. Could someone please explain me 6 / (24+6)?

Thanks!