In fixing of the price of the rifght shares, following considerations should be borne in mind:(i) The first consideration is as to what

can the market bear. If the amount col lected by issue of right shares is not invested in securities yielding a good re turn or normal return, the market price of shares in the long run will go down. In that case, rights will not be used and investors will invest their funds in a lternative investments. (ii) The other consideration in the state of capital market. The company should keep vigil on the market price and see how its shares have been moving in the ma rket in the past and how these are likely to move, if the rights are fixed at a particular price. (iii) The company should also take the general price trend in the capital market into consideration i.e., whether the general prices are stable or fluctuating. If trend is not stable, the investors will not like to invest funds in securitie s hence rights cannot be favored. (iv) The profit-earning capacity of shares also affect the price of right shares . If they have no capacity or low capacity or low capacity to earn profits, they will not be offered by the shareholders howsoever low their price may be. On th e other hand, if profit earning capacity of the shares are somewhat, higher, reg ular an dependable, the rights will attract the existing shareholders as well as their nominees whether rights are priced a bit higher. (v) The prospects of proposed plans of expansion also affects the pricing issue. If plans seem profitable, the right may be priced a bit high. On the other hand , if the plans are not attractive or slow, the price will be fixed differently. (vi) Dividend policy of the enterprise is also an important factor. If conservat ive policy of dividend is adopted by to be company, the shareholders shall not b e interested in purchasing the rights. The price may be fixed much lower. If the y are getting good dividend, the price may be fixed much lower. If they are gett ing good dividend, the price may be fixed somewhat higher. (vii) The resource position of the company also affects the pricing of right iss ue. If financial position of the company is sound, the shareholders will be attr acted to invest and the price may be fixed at somewhat higher level otherwise th e position will be reserved. But, whatsoever the pricing policy of rights, the enterprise will have to take i nto consideration to basic facts-Firstly, it should fix the premium, not so low, nor so high an secondly, it should yield the shareholders a fair return. The en terprise should struck a judicious balance between the two.