Theoretical ex-rights price
The Theoretical ex-rights price ( TERP ; in German: theoretical post-rights price ) is the share price adopted in accordance with the emission Young shares after a capital increase .
backgrounds
If new shares are issued, this is often done at a lower price than the current market price of the share. This discount (Engl. Discount ) provides an incentive for existing and potential new shareholders are to invest in the new, young stock. This discount is also one of the reasons why a subscription right is of interest to the existing shareholders , or it represents the basis for determining the value of the subscription rights.
The TERP is calculated by determining the arithmetic mean of the prices of new and old shares, i.e. multiplying the amount of old shares by the current market price (share price), adding the product of the amount of young shares and the issue price of the new shares to this and calculating this through dividing the sum of the amount of new shares + old shares:
