Preston Toy Co. has warrants outstanding that allow the holder to purchase a share of stock for

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Preston Toy Co. has warrants outstanding that allow the holder to purchase a share of stock for $17 (exercise price). The common stock is currently selling for $25, while the warrant is selling for $11.10 per share.
a. What is the intrinsic (minimum) value of this warrant?
b. What is the speculative premium on this warrant?

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Related Book For  answer-question

Foundations Of Financial Management

ISBN: 9781264097623

18th Edition

Authors: Stanley Block, Geoffrey Hirt, Bartley Danielsen

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