John and Randy form a company with assets worth $900. They each have two shares of stock. The firm sells Cheri a warrant for one share of stock. The warrant has an exercise price of $200 and expires in one year. In one year, the firm's assets are worth $1,200 immediately before expiration of the warrant. Should Cheri exercise the warrant?
A) No, because the option is out of the money.
B) Yes, because she stands to gain $40 by exercising.
C) Yes, because she stands to gain $80 by exercising.
D) Yes, because she stands to gain $100 by exercising.
E) We can't tell without knowing what she paid for the warrant.

Question

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The Answer of John and Randy form a company with assets worth $900. They each have two shares of stock. The firm sells Cheri a warrant for one share of stock. The warrant has an exercise price of $200 and expires in one year. In one year, the firm's assets are worth $1,200 immediately before expiration of the warrant. Should Cheri exercise the warrant?
A) No, because the option is out of the money.
B) Yes, because she stands to gain $40 by exercising.
C) Yes, because she stands to gain $80 by exercising.
D) Yes, because she stands to gain $100 by exercising.
E) We can't tell without knowing what she paid for the warrant.

John and Randy Form a Company with Assets Worth $900