Currently, B&H Limited Company has 1 million shares outstanding selling at $76 a share. A rights issue will be made that allows 1 share to be purchased for every 5 shares currently held by stockholders for $40 each. Which one of the following is true?
a) The stock price will fall to $70 with the total value of the firm will equal $80 million.
b) The stock price will fall to $65 with the total value of the firm will equal $84 million.
c) The stock price will fall to $60 with the total value of the firm will equal $80 million.
d) The stock price will fall to $70 with the total value of the firm will equal $84 million.