The intrinsic value of a warrant to buy 4 shares of Merton stock at $53 per share is $20. What is the current market price of Merton stock?
A) $55.00
B) $59.00
C) $58.00
D) None of these

Question

Quizplus · Accepted Answer

The intrinsic value of a warrant is calculated as the difference between the current market price of the stock and the exercise price, multiplied by the number of shares. Here, $20 = (Current Market Price - $53) * 4. Solving for the current market price gives $58.

The Intrinsic Value of a Warrant to Buy 4 Shares