Preston Toy Co. has warrants outstanding that allow the holder to purchase one conunon share at $22

Question:

Preston Toy Co. has warrants outstanding that allow the holder to purchase one conunon share at $22 per share (option price). The common stock is currently selling for $28. The warrant is selling for $10.50.

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...

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