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Calculate the intrinsic value at this price

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Question - a. ABC Co. warrants entitle the owner to buy one share at $40, with market values of $5 for the warrant and $42 for the common shares. What is the intrinsic value of the warrant? What is the time value of the warrant?

b. Assume in this case that the ABC common trades at $35 a share (all other factors remain the same) Calculate the intrinsic value at this price. Calculate the time value at this price.

Reference no: EM133051873

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