Loading…
SIDC PrepStudyingModule 6
Switch exam
Investment advice and corporate finance
Module 12Investment Management and Corporate FinanceA share trades at RM1.70 cum-rights. The company offers 2 new shares for every 5 held at RM1.00. What is the theoretical ex-rights price?
TERP = (5 × 1.70 + 2 × 1.00) ÷ 7 = (8.50 + 2.00) ÷ 7 = RM1.50. RM1.35 averages the cum price and the issue price equally. RM1.58 treats the issue as 1-for-5 ((5 × 1.70 + 1.00) ÷ 6). RM1.70 ignores the dilution from issuing shares below the market price. Source: SIDC Module 7 Study Outline (Jul-Dec 2026) Topic 5 Equity Markets; Bodie, Kane and Marcus, Investments, chapters on equity valuation (as at October 2026).
Averaging the two prices instead of weighting by the number of shares.
Practise more Module 7 Equity markets and valuation questions
Exam-style questions with worked answers, then full timed mocks. Free to start.
Build a daily practice habit — a few exam-style questions a day, with worked answers. Free to start.
Start practising →Original study material mapped to the public SIDC Module 7 syllabus. Unofficial, not endorsed by SIDC or the SC. Verify figures and rules against current guidance before relying on them.