Preston Toy Co has warrants outstanding that allow the holder to purchase a share of stock for $22 (exercise price) The common stock is currently selling for $28, while the warrant is selling for $9 25 per share a What is the intrinsic (minimum) value of this warrant b What is the speculative premi...

Preston Toy Company a I M E N Where I Intrinsic value of a warrant M Market value of common s ...

Preston Toy Co. has warrants outstanding that allow the holder to purchase a share of stock for

Question:

Preston Toy Co. has warrants outstanding that allow the holder to purchase a share of stock for $22 (exercise price). The is currently selling for $28, while the warrant is selling for $9.25 per share.
a. What is the intrinsic (minimum) value of this warrant?
b. What is the speculative premium on this warrant?

Common Stock
Common stock is an equity component that represents the worth of stock owned by the shareholders of the company. The common stock represents the par value of the shares outstanding at a balance sheet date. Public companies can trade their stocks on...