What is the intrinsic value of this warrant

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Reference no: EM131333607

Quantum Inc. has warrants outstanding that allow the holder to purchase 1.5 shares of stock per warrant at $22 per share (exercise price). Thus each individual share can be purchased at $22 with the warrant. The common stock is currently selling for $29. The warrant is selling for $12.00.

a. What is the intrinsic (minimum) value of this warrant? (Do not round intermediate calculations and round your answer to 2 decimal places.)

b. What is the speculative premium on this warrant? (Do not round intermediate calculations and round your answer to 2 decimal places.)

c. What should happen to the speculative premium as the expiration date approaches?

Speculative premium should decrease.

Speculative premium should increase.

Speculative premium should not change.

Reference no: EM131333607

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