Warrants Class Assessment: Bonus Question 17 1 Warrant Face value = $1,000 Example: T =5 years Margolf Corp. issued 2,000, $1,000 bonds at 101. Each bond was C = 8% issued with one detachable five-year stock warrant to buy one share of common stock (par value $5) at $25. If the bonds had not included the equity 'kicker', they would have sold for 99. 1. What is maturity of warrants? 2. What is the strike price of warrant? 1. Short Position = Margolf Corp. 2. Long Position = Investor 3. What is price/value/premium of warrant? 3. Underlying Asset: Margolf 4. Will warrant be exercised if stock price is $45? Corp. Share 5. How many new stocks company will issue? 4. Quantity = 2000 stock 6. How much share capital company will raise only from new 5. Strike Price = $25 stock issuance? 6. Maturity = 7 Years 7. Why Warrants are called Equity Kicker? 7. Warrant/Option Price = $5