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Finance for Business

Boston College Global

Question Description

Three warrants are required to purchase one share of common stock for $50. The warrants are selling for $10 each and the common stock is currently selling for $68.
a) What is the value of each warant?
b) What is the warrant premium in dollars and in percentage?

Assume a company has 5 milion shares of common stock outstanding and intends to issue another 1,000,000 shares through a rights offering. The rights will carry a subscription price of $80. If the current market price of the stock is $100, what is the value of the right?

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