The Exercise Price of the American Dairy Company Is $17

question 44

Multiple Choice

The exercise price of The American Dairy Company is $17.You purchase the warrants for $4.00 each when American Dairy's stock price is $20.00 a share.Each warrant entitles you to purchase one share of ADC stock.Calculate your percentage gain assuming the warrant premium drops by 50% and you sell your warrants when the stock reaches $30.00 per share.

• A) 37.5%
• B) 87.5%
• C) 137.5%
• D) 237.5%
• E) 337.5%