Diamond Drill Inc.has 150,000 shares and 15,000 warrants outstanding.A warrant holder can purchase a new share of equity for ﬁve warrants and €5.00 per warrant.The equity is currently
Selling for €27 per share.If all warrants are exercised, what will your fraction of ownership be if you
Owned 20,000 shares originally?

Question

Quizplus · Accepted Answer

If all warrants are exercised, 15,000 warrants / 5 = 3,000 new shares will be issued. The total shares will then be 150,000 original shares + 3,000 new shares = 153,000 shares. If you originally owned 20,000 shares, your new ownership percentage after the warrants are exercised would be 20,000 / 153,000 = 13.07%.