Question
SPJ plc's current share price is 3.90. An investor is wondering whether to buy shares in SPJ or warrants in the company. The warrant has
SPJ plc's current share price is 3.90. An investor is wondering whether to buy shares in SPJ or warrants in the company. The warrant has a duration of one year and allows the purchase of 20 SPJ shares at an exercise price of 4.10. The cost of the warrant is 8.00. If the share price for SPJ is 4.78 in a year's time what are the corresponding returns for buying SPJ's shares and warrants on SPJ's shares? SPJ plc paid no dividend over this period. A. 22.6% Return on shares 70% Return on the option B. 22.6% Return on shares 16.6% Return on the option C. 22.6% Return on shares 10% Return on the option D. 5.1% Return on shares 70% Return on the option E. 5.1% Return on shares 16.6% Return on the option
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