Purchase Solution

Value of Stock Warrants

Not what you're looking for?

Ask Custom Question

The Preston Toy Co has warrants outstanding that allow the holder to purchase a share of stock for $22. (exercise price) The common stock is currently selling for $28, while the warrant is selling for $9.25 per share.

a. What is the intrinsic (minimum) value of this warrant?
b. What is the speculative premium on this warrant?
c. What should happen to the speculative premium as the expiration date approaches?

Purchase this Solution
Solution Summary

The solution does a great job of answering the problems below. Both the problem and the answers are straightforward and well explained.

Purchase this Solution
Free BrainMass Quizzes
Situational Leadership

This quiz will help you better understand Situational Leadership and its theories.

Managing the Older Worker

This quiz will let you know some of the basics of dealing with older workers. This is increasingly important for managers and human resource workers as many countries are facing an increase in older people in the workforce

Basic Social Media Concepts

The quiz will test your knowledge on basic social media concepts.

Change and Resistance within Organizations

This quiz intended to help students understand change and resistance in organizations

Introduction to Finance

This quiz test introductory finance topics.

View More Free Quizzes
Related BrainMass Solutions

  • Bonds with detachable warrants

    Twenty detachable stock warrants entitling the holder to purchase for $40 one share of Logan's common stock, $15 par value, were attached to each $1,000 bond. The bonds without the warrants would sell at 96.

  • This post addresses paid-in capital from stock warrants.

    On March 1, 2010, the fair market value of Ruiz's common stock was $40 per share and the fair market value of the warrants was $2.00. What amount should Ruiz record on March 1, 2010 as paid-in-capital from stock warrants?

  • Shareholder's Equity

    499947 Shareholder's Equity Blue Co. issued preferred stock with detachable common stock warrants at a price which exceeded both the par value and the market value of the preferred stock.

  • Convertible bonds and stock warrants

    To help the sale, detachable stock warrants are issued at the rate of ten warrants for each $1,000 bond sold. It is estimated that the value of the bonds without the warrants is $4,935,000 and the value of the warrants is $315,000.

  • Bond with Warrants

    Stock price $30 Bonds-life and par value 20 Par value $1,000 # of warrants per bond 40 Exercise price $36 Warrant market value @ P=$30) $0.75 Yield on straight bonds 8% # of warrants per bond= 40 Warrant

  • Expiration value of warrants

    367699 Expiration value of warrants The Clayton Corporation has warrants outstanding that permits the holder to purchase one share of common stock per warrant at $30.

  • Journal Entries for Bonds with Detachable Warrants

    375313 Issuance of Bonds with Stock Warrants On May 1, 2007, Friendly Company issued 2,000 $1,000 bonds at 102. Each bond was issued with one detachable stock warrant.

  • Intrinsic value of the warrant

    The warrants are currently selling for $4 per warrant. (a) How much would you have to spend to buy one share of stock using the warrants? Does this make sense? (b) What is the intrinsic value of the warrant?

  • Warrants - Intrinsic Value, Premium

    272184 Warrants - Intrinsic Value, Premium The People Power Corp. currently has a common stock selling for $15 per share. Warrants are also available. Three warrants entitle the holder to purchase one share of common stock for $9.

  • Bonds with warrants

    One detachable stock warrant entitling the holder to purchase 15 shares of ABC's common stock was attaced to each bond. At the date of issuance, the market value of the bonds, without the stock warrants, was quoted at 96.

View More Related Solutions