Theoretical ex-rights price
The Theoretical ex -rights price ( TERP, to German: theoretical post- rights price) the assumed share price after the issue is Young shares pursuant to a capital increase.
Will New shares issued, this happens often at a cheaper price than the current market price of each share. This discount (german discount ) represents an incentive for existing and potential new shareholders to invest in the new young stock. This discount is also one of the reasons why a subscription rights for existing shareholders is interesting and represents the basis for determining the value of the subscription rights
Calculates ie the amount of existing shares at the current market price is the TERP by determining the arithmetic mean of the prices of young and old shares (share price ) multiplied to this adds the product of quantity Young shares and issue price of the new shares, and this by the sum of the amount of shares Young Old Shares divided: