Question: Mr. and Mrs. Anderson own five shares of Magic Tricks Corporation's common stock. The market value of the stock is $78. The Andersons also have $66 in cash. They have just received word of a rights offering. One new share of stock can be purchased at $66 for each five shares currently owned (based on five rights). a. What is the value of a right? b. What is the value of the Andersons' portfolio before the rights offering? (Portfolio in this question represents stock plus cash.) c-1.Compute the diluted value (ex-rights) per share. c-2. If the Andersons participate in the rights offering, what will be the value of their portfolio, based on the diluted value (ex-rights) of the stock? d. If they sell their rights but keep their stock at its diluted value and hold on to their cash, what will be the value of their portfolio?

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