Calculate the intrinsic value of the warrant


Question: Suppose you can purchase a warrant for $5 that gives you the option to buy one share of common stock at $14 per share. The stock is currently selling at 16 dollar per share.

[A] Calculate the intrinsic value of the warrant?

[B] Calculate the speculative premium on the warrant?

[C] Suppose if the stock rises to $24 per share & the warrant sells at its theoretical value without a premium, what will be the percentage raise in the stock price and the warrant rate if you bought the stock & the warrant at the rates stated above? Explain the relationship.

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Finance Basics: Calculate the intrinsic value of the warrant
Reference No:- TGS020164

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