A warrant that does not expire until several years into the future provides its owner the opportunity to buy a stock. If the stock price rises, the warrant will probably sell for
A) less than its intrinsic value.
B) exactly its intrinsic value.
C) more than its intrinsic value.
D) less than or equal to its intrinsic value.

Question

Quizplus · Accepted Answer

A warrant that doesn't expire for several years provides its owner the right to buy a stock at a set price, regardless of how much the stock's price rises. Thus, the higher a stock's price rises, the more valuable the warrant becomes, making it sell for more than its intrinsic value. Therefore, the best answer is C.

A Warrant That Does Not Expire Until Several Years into the Future