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Calculate the intrinsic value at this price

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Question - 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?

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: EM133064611

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