SIE practice questionhardWarrants
A company issues warrants at $20 when its stock is $16. After three years, the stock is $28. What is the intrinsic value of the warrant?
- A$16 per warrant
- B$4 per warrant
- C$12 per warrant
- D$8 per warrant✓ Correct answer
Explanation
Why D — $8 per warrant
Intrinsic value is market price minus exercise price: $28 - $20 = $8. The other answers result from incorrect subtraction.
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