Intrinsic value of warrant

Assignment Help Financial Management
Reference no: EM131317623

Preston toy co has warrants outstanding that allow the holder to purchase a share of stock for $19 (erercise price). The common stock is currently selling for $25, while the warranty is selling for $8.75 per share.

  1. What is the intrinsic (min.) value of this warrant?
  2. What is the speculative premium on this warrant?

Reference no: EM131317623

Questions Cloud

What is a divergence meter : Distinguish between the physical interpretations of the divergence and the curl of a vector field by means of examples.
What is the conversion value of the bond : Plunkett gym equipment inc. has a $1,000 par value convertible bond outstanding that can be converted in 45 shares of common stock. The common stock is currently selling for $27.60 per share and the convertible bond is selling for $1,277.50
Create presentations using cascading style sheets and dhtml : Describe the structure of the World Wide Web as interconnected hypertext documents. Create and validate HTML documents. Create presentations using Cascading Style Sheets and DHTML.
What purpose do covenants serve in a debt agreement : What purpose do covenants serve in a debt agreement? What factors should a manager consider when negotiating covenants?
Intrinsic value of warrant : What is the intrinsic (min.) value of this warrant? What is the speculative premium on this warrant?
What is the company total assets turnover : DuPont Analysis Gardial & Son has an ROA of 10%, a 4% profit margin, and a return on equity equal to 14%. What is the company's total assets turnover?
Discuss key features that distinguish long term debt issues : List and briefly discuss the key features that distinguish long-term debt issues from each other.- Define the following: term loan, balloon payment, collateral, and stock purchase warrants.
Significance of a nonzero net right-lateral differential : If a pair of E and B at a point satisfies Faraday's law in differential form, does it necessarily follow that it also satisfies Ampere's circuital law in differential form, and vice versa?
What are the benefits of ip compression : What are the benefits of IP compression? Are the steps to create VPN between Cisco and Checkpoint similar? Define the steps in your own terms and what is the activity that gets performed in each step?

Reviews

Write a Review

Financial Management Questions & Answers

  Stock has an annual return mean and standard deviation

DW Co. stock has an annual return mean and standard deviation of 10 percent and 31 percent, respectively. What is the smallest expected loss in the coming year with a probability of 2.5 percent?

  Depreciation deduction and unrecovered investment

Electric generating and transmission equipment is placed in service at a cost of $3,100,000. It is expected to last 30 years with a salvage value of $250,000. What is the MACRS-GDS property class? Determine the depreciation deduction and the unrecove..

  Firms expenditures on fixed assets-net operating capital

Maze Co. recently reported operating income of $6.45 million, depreciation of $1.22 million, and had a tax rate of 40%. The firm's expenditures on fixed assets and net operating working capital totalled $0.8 million. How much was its free cash flow, ..

  About the sustainable growth rate

Johnson Products earned $3.05 per share last year and paid a $1.50 per share dividend. If ROE was 13 percent, what is the sustainable growth rate? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places. Om..

  Preferred stock-market and common stock

The Saunders Investment Bank has the following financing outstanding. Debt: 30,000 bonds with a coupon rate of 6 percent and a current price quote of 112; the bonds have 20 years to maturity. 200,000 zero coupon bonds with a price quote of 21 and 30 ..

  What is the efficient number of lighthouses

Suppose that there are only two fishermen, Zach and Jacob, who fish along a certain coast. They would each benefit if lighthouses were built along the coast where they fish. The marginal cost of building each additional lighthouse is $100. Explain wh..

  What is market price of this stock if market rate of return

Arcs and Triangles paid an annual dividend of $1.47 a share last month. The company is planning on paying $1.55, $1.63, and $1.65 a share over the next three years, respectively. After that, the dividend will be constant at $1.70 per share per year. ..

  What are the incremental net cash flows that will occur

The Erley Equipment Company purchased a machine 5 years ago at a cost of $80,000. The machine had an expected life of 10 years at the time of purchase, and it is being depreciated by the straight-line method by $8,000 per year. If the new machine is ..

  Project is expected to destroy value of corporate owners

Which one of the following indicates that a project is expected to destroy value of corporate owners?

  What will the price be in three years and in fifteen years

Gilmore, Inc., just paid a dividend of $3.15 per share on its stock. The dividends are expected to grow at a constant rate of 6 percent per year, indefinitely. Assume investors require a return of 11 percent on this stock. What is the current price? ..

  Using the perpetual growth method

Suppose the dividends for the Seger Corporation over the past six years were $1.02, $1.10, $1.19, $1.27, $1.37, and $1.42, respectively. Compute the expected share price at the end of 2014 using the perpetual growth method.

  What is the yield to maturity for these bonds

Phillips Fine Fixtures Inc. wishes to issue new bonds but is uncertain how the market would set the yield to maturity. The bonds would be 20-year, 7% annual coupon bonds with a $1,000 par value. Fisher has determined that these bonds would sell for $..

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd