Jenni Shover, Inc., has warrants outstanding that allow the holder to purchase three shares of common stock

Question:

Jenni Shover, Inc., has warrants outstanding that allow the holder to purchase three shares of for a total $60 for each warrant that is held. Currently, the market price per share of Jenni Shover is $18. However, investors hold the following probabilistic beliefs about the stock six months hence.

a. What is the present theoretical value of the warrant?
b. What is the expected value of stock price six months hence?
c. What is the expected theoretical value of the warrant six months hence?
d. Would you expect the present market price of the warrant to equal its theoretical value? If not, why not?

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...