FTB-C000124 / Formula component

Theoretical Ex-Rights Price

Theoretical ex-rights price estimates the post-rights per-share price from the cum-rights price and subscription terms under simplifying assumptions.

Also known asTERP

Advanced Formula defined 1 linked topicPublished

Definitions

In plain terms

It spreads the combined old-share value and new subscription cash across the enlarged share count.

Technical

For n new shares per old share, the simplified TERP is the cum-rights reference price plus n times subscription price, divided by one plus n; variants handle dividend disadvantage and other terms.

Scope

TERP is theoretical, not a forecast or proof of the observed ex-rights market price.

Formula

TERP = (P0 + n * S) / (1 + n)
LaTeX: TERP=(P_0+nS)/(1+n)
SymbolMeaningUnit
P0cum-rights reference pricecurrency per old share
nnew shares offered per old shareshare ratio
Ssubscription pricecurrency per new share

Output unit: currency per share

Examples

  • A governed calculation records theoretical ex-rights price with its exact basis, effective time, source, and units.

Common misconceptions

  • Theoretical Ex-Rights Price does not have one universal treatment without the applicable methodology, event terms, and data context.

Concept relationships

Prerequisites

Related

Where this concept is used

Tutorials planned

These catalogued topics use this concept, but their complete build has not shipped yet.

  • D02-F02-A01 Primary

Evidence and governance

  1. S&P DJI Equity Indices Policies & Practices S&P Dow Jones Indices · first party methodology

    Supports: preferred label, short definition, technical definition, formula

    Limits: Provider-specific rules and discretion must be read with the methodology effective for the named index and date.

  2. Fintech Builder Glossary Definition Contract The Fintech Builder · internal governed contract

    Supports: variant distinction

    Limits: Defines governed platform behavior rather than claiming these policies are universally prescribed by external McClellan methodology.

Reviewed by
Last reviewed
2026-07-27
Next review
2027-07-27
Record status
published
Written by

Fintech engineer building market-data and financial systems, and the author of every article, glossary record, and reference implementation on The Fintech Builder.