What is Value of Right ?
The value of a right, often encountered in financial contexts like rights offerings or corporate actions, represents the theoretical worth of the privilege granted to existing shareholders to purchase additional shares of stock at a specific price within a defined period. This value is determined by market forces and can fluctuate based on factors such as the current stock price, the exercise price of the rights, prevailing interest rates, market sentiment, and the duration until the rights expire. Typically, the value of a right is calculated as the difference between the market price of the stock and the subscription price of the rights. Investors and analysts closely monitor the value of rights as it influences the decision-making process regarding participating in rights offerings, trading rights in the secondary market, or assessing the overall attractiveness of the offering.
How to Calculate Value of Right?
Value of Right calculator uses Value of Right per Share = (Stock Price-Right Subscription Price)/Number of Rights to Buy a Share to calculate the Value of Right per Share, The Value of Right is the market-determined price representing the theoretical worth of the privilege to purchase additional shares during a rights offering. Value of Right per Share is denoted by VOR symbol.
How to calculate Value of Right using this online calculator? To use this online calculator for Value of Right, enter Stock Price (SP), Right Subscription Price (RSP) & Number of Rights to Buy a Share (n) and hit the calculate button. Here is how the Value of Right calculation can be explained with given input values -> 0.75 = (38-35)/4.