In September 2008, in the midst of the credit crisis on Wall Street, Goldman Sachs invited Warren

Question:

In September 2008, in the midst of the credit crisis on Wall Street, Goldman Sachs invited Warren Buffett, the legendary fundamental investor, to contribute much-needed equity capital to the firm. Buffett seemingly got a very good deal. For a $5 billion cash infusion, he received perpetual preferred equity shares carrying a 10 percent dividend (redeemable by Goldman Sachs) plus warrants to buy 43.5 million common shares at $115 per share (for a total of another $5 billion). The $115 conversion price was set at the current share price, a three-year low for Goldman. In June 2011, Goldman's shares traded at $136 each. If Buffet exercised the warrants at that price, what is the loss to Goldman's shareholders?

Dividend
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their...