What is the intrinsic value of the warrant

Assignment Help Financial Management

Reference no: EM131903698

1) Jin R i Corporation is planning to raise $35m through the sale of new common stock under a rights offering. The subscription price is $70 per share while the stock currently sells for $82 per share, rights on. Total outstanding shares equals 10m. Of this amount Annie Joss owns 100,000.

A. How many shares will each right permit its owner to purchase?

B. What will be the total value of Annie's rights a day before the ex-rights date, assuming the market price of St. Paul stock remains at $82?

C. What is the price of the stock immediately after it starts trading ex-rights assuming the stock is worth $82?

2) Assume you can buy a warrant for $5 that gives you the option to buy one share of common stock at $14 per share. The stock is currently selling for $16 per share.

A. What is the intrinsic value of the warrant?

B. What is the speculative premium on the warrant?

C. If the stock rises to $24 per share and the warrant sells at its intrinsic value (without a premium), what will be the percentage increase in both the stock price and the warrant price? (assume you purchased the stock for $16 and the warrant for $5) Which offers you the greater return?

Reference no: EM131903698

Questions Cloud

What coloridentified the microconcentrator column : What coloridentified the microconcentrator column? Identification of a Pathogenic Bacterium using PCR & DNA Sequencing

Role of the primary care physician in the future : What factors are shifting the role of the primary care physician in the future?

Perform a web search for software systems : Perform a Web search for software systems that can help you develop an RFP. Provide the Web address and a brief summary for three of the systems you found.

Functional in infants or children than in adults : Identify three endocrine glands that are larger or more functional in infants or children than in adults. What us the tern for the shrinkage of a gland

What is the intrinsic value of the warrant : What will be the total value of Annie's rights a day before the ex-rights date, assuming the market price of St. Paul stock remains at $82?

What is the break-even point per month in sales dollars : Lake Stevens Marina has estimated that fixed costs per month are $350,000. What is the break-even point per month in sales dollars

How should Jennifer go about making her decision : How should Jennifer go about making her decision? What kind of additional data or information should she collect?

Compute the profit margin and asset turnover : Barr Company had total assets of $320,000 in 2008, Compute the profit margin, asset turnover, return on assets, and return on equity for 2009 and 2010

What problem might occur : Suppose that a clock interrupt occurs while some thread is executing in the runtime system. What problem might occur? Can you suggest a way to solve it?

User Account

All Pages