Question Details

Todd Winningham IV has $5,700 to invest. He has been looking atGallagher Tennis Clubs Inc. common stock. Gallagher has issued arights offering to its common stockholders. Six rights plus $64cash will buy one new share. Gallagher’s stock is selling for $82ex-rights.

How many rights could Todd buy with his $5,700? (Do notround intermediate calculations and round your answer to thenearest whole number.)

Alternatively, how many shares of stock could he buy with thesame $5,700 at $82 per share? (Do not round intermediatecalculations and round your answer to the nearest wholenumber.)

If Todd invests his $5,700 in Gallagher rights and the price ofGallagher stock rises to $90 per share ex-rights, what would hisdollar profit on the rights be? (First compute profit per right.)(Do not round intermediate calculations and round youranswer to the nearest whole dollar.)

If Todd invests his $5,700 in Gallagher stock and the price ofthe stock rises to $90 per share ex-rights, what would his totaldollar profit be? (Use the rounded number of shares frompart a-2. Do not round any other intermediate calculations andround your answer to the nearest whole dollar.)

If Todd invests his $5,700 in Gallagher rights and the price ofGallagher’s stock falls to $56 per share, ex-rights, what would hisdollar profit on the rights be? (Negative amount should beindicated by a minus sign. Do not round intermediate calculationsand round your answer to the nearest whole dollar.)

If Todd invests his $5,700 in Gallagher stock and the price ofGallagher’s stock falls to $56 per share ex-rights, what would behis total dollar profit? (Negative amount should beindicated by a minus sign. Use the rounded number of shares frompart a-2. Do not round any other intermediate calculations andround your answer to the nearest whole dollar.)