The intrinsic value of a warrant is calculated as:
A)(Market price of common stock + Warrant exercise price) *Number of shares specified by warrant.
B)(Market price of common stock - Warrant exercise price) * Number of shares specified by warrant.
C)(Market price of common stock + Warrant exercise price)/Number of shares specified by warrant.
D)(Market price of common stock - Warrant exercise price)/Number of shares specified by warrant.
E)None of the above.

Question

Quizplus · Accepted Answer

The intrinsic value of a warrant is the difference between the market price of the underlying common stock and the warrant exercise price, multiplied by the number of shares specified by the warrant. Therefore, the correct formula is (Market price of common stock - Warrant exercise price) x Number of shares specified by warrant. Option B is the only one that contains this formula.

The Intrinsic Value of a Warrant Is Calculated As