A warrant has an exercise price of $15.The underlying common stock has a market price of $10.The formula value of a warrant would be
A)$5
B)$0
C)-$5
D)cannot be determined from the information given

Question

Quizplus · Accepted Answer

The formula value of a warrant is the difference between the market price of the underlying stock and the exercise price of the warrant. In this case, the market price of the underlying stock ($10) is less than the exercise price of the warrant ($15), so the formula value of the warrant is $0.

A Warrant Has an Exercise Price of $15