John and Randy Form a Company with Assets Worth $900

question 103

Multiple Choice

John and Randy form a company with assets worth $900. They each have two shares of stock. The firm sells Cheri a warrant for one share of stock. The warrant has an exercise price of $200 and expires in one year. In one year, the firm's assets are worth $1,200 immediately before expiration of the warrant. Should Cheri exercise the warrant?

• A) No, because the option is out of the money.
• B) Yes, because she stands to gain $40 by exercising.
• C) Yes, because she stands to gain $80 by exercising.
• D) Yes, because she stands to gain $100 by exercising.
• E) We can't tell without knowing what she paid for the warrant.

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Definitions:

Biological Anthropology

The systematic study of humans as biological organisms. Also known as physical anthropology.

Primatology

The scientific study of primates, including humans, their evolution, behavior, and ecology, aiming to understand aspects of our own behavior and biology.

Ethnology

The comparative and analytical study of cultures; a branch of anthropology that examines the cultural variations among humans.

Archaeology

The study of human cultures through the recovery and analysis of material remains and environmental data.