FINRA Series 65 quiz

An investor owns 385 shares of Channing Enterprises stock, currently valued at $102. The company just declared a rights offering which states "for every 30 rights, current stockholders can buy one additional Channing Enterprises share for $85. If a fractional number of shares are eligible to be purchased, the company will allow investors to round up. If the investor exercises their rights, what do they receive?

Shareholders receive one right for every share owned during a rights offering. Channing has 385 shares, therefore they have 385 rights. For every 30 rights exercised, Channing can purchase a new share for $85 per share. 385 rights divided by 30 is 12.83. Rounded up, Channing will be able to purchase 13 new shares at the exercise price of $85 per share.