A stock warrant entitles the owner to buy a specified number of shares of stock at a

Question:

A stock warrant entitles the owner to buy a specified number of shares of stock at a specified price. Landon Davis owns 1,000 stock warrants. Each warrant entitles him to buy one share of Plum Street Company for $50. The current market price of a share of Plum Street common is $40. Because the warrant price is higher than the current market price, Landon has decided that his warrants are worthless and is going to throw them away. Do the warrants have any value? How would you explain to Landon the factors that influence the value of a stock warrant?

Common Stock
Common stock is an equity component that represents the worth of stock owned by the shareholders of the company. The common stock represents the par value of the shares outstanding at a balance sheet date. Public companies can trade their stocks on...