You have paid $5 to buy a warrant with an exercise price of $40.The stock is currently trading at $50.How much profit or loss would you make by exercising the warrant if one warrant entitles the owner to buy one share of stock?

Question

Quizplus · Accepted Answer

Exercising the warrant allows you to buy the stock at $40, which is currently trading at $50, giving you a profit of $10 per share. However, since you paid $5 for the warrant, your net profit is $10 - $5 = $5.

You Have Paid $5 to Buy a Warrant with an Exercise