Question
Valuing warrants 10. Assume a firm has warrants outstanding that permit the holder to buy one new share of stock at $25 per share. The
Valuing warrants
10. Assume a firm has warrants outstanding that permit the holder to buy one new share of stock at $25 per share. The market price of the stock is now $34.
a. What is the intrinsic value of the warrant?
b. Why might the warrant sell for $2 on the market even if the stock price is $22?
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Handbook Of Asset And Liability Management Volume 2
Authors: S. A. Zenios, W. T. Ziemba
1st Edition
0444528024, 978-0444528025
