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Author Message  ken Member Username: ken Post Number: 333 Registered: 04-2003 Rating: N/A Votes: 0 Wednesday, December 07, 2005 - 07:15 pm:     Hello Colin / Robin, RRS went ex-entitlement today for a rights and options issue. The IC data has been adjusted downwards, and I'm not sure if this is the right thing to do. There has been no share split as such so I would have expected the share price to fall in the same way as ex-dividend, and for this to be reflected in the chart. Instead we get the prices previous to today falling and today appearing as a big up day. Do you think this is how it should have been adjusted? Ken Trade with the trend, not against it. The trend is the direction of the 22ema line (Elder)  colin_twiggs Member Username: colin_twiggs Post Number: 2296 Registered: 09-2002 Rating: N/A Votes: 0 Thursday, December 08, 2005 - 02:58 pm:     Ken, The additional shares were issued at a price of $0.015 when the price was above $0.040. This is known as a deep-discount rights issue -- there is little chance of shareholders passing up the purchase because of the substantial discount to the current price. If we take the price as 4.5 cents (for this example) and one new share is issued at 1.5 cents for each two existing shares. Before the issue, the shareholder had two shares at 4.5 cents = 9.0 cents. After the issue, he/she has three shares at a value of 9.0 cents + 1.5 cents = 10.5 cents. Each share is now worth 10.5 cents/3 = 3.5 cents. To make the price history comparable we have to adjust for the dilution effect of the rights issue. The dilution is therefore 3.5/4.5 cents = 0.778. Regards, Colin

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