Question
ou can buy a warrant for $10.00 that gives you the option to buy one share of common stock at $20.00 per share. The stock
ou can buy a warrant for $10.00 that gives you the option to buy one share of common stock at $20.00 per share. The stock is currently selling at $18.00 per share.(Leave no cells blank - ensure that "0" is entered wherever required.)
a.What is the intrinsic (minimum) value of the warrant?(Round the final answer to 1 decimal place.)
Intrinsic value$
b.What is the speculative premium on the warrant?(Round the final answer to 2 decimal places.)
Speculative premium$
c.If the stock rises to $40.00 per share and the warrant sells at its intrinsic value plus a speculative premium of $1.00, what will be the percentage increase in the stock price and the warrant price if you bought the stock and the warrant at the prices stated above, $18.00 and $10.00?(Do not round the intermediate calculations. Round the final answer to 2 decimal places.)
Percentage
increaseShare%Warrant%
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