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)TERP=(P_0+nS)/(1+n)| Symbol | Meaning | Unit |
|---|---|---|
P0 | cum-rights reference price | currency per old share |
n | new shares offered per old share | share ratio |
S | subscription price | currency 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
Evidence and governance
- 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.
- 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
- fintech-builder-owner-approved
- Last reviewed
- 2026-07-27
- Next review
- 2027-07-27
- Record status
- published