Mercury Inc

question 64

Multiple Choice

Mercury Inc. issued bonds with warrants attached that had an exercise price of $22. Each warrant allows the holder to purchase two shares. Since the issuance, the stock split 2 for 1, the current stock price is $24 and the warrant price is $30. How much is the warrant selling above its formula value?

• A) 84.6%
• B) 130.8%
• C) 15.4%
• D) 269%

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Definitions:

Constructive Trust

An equitable trust imposed on a person who wrongfully obtains or holds legal right to property he or she should not possess.

Equitable Trust

A fiduciary relationship wherein one party, known as the trustee, holds assets for the benefit of another party, the beneficiary, according to equitable principles of fairness.

Implied-In-Fact

A contract formed by non-verbal conduct, rather than explicit words, indicating that both parties intend to be bounded.

An Accounting

The process or act of maintaining financial records, summarizing transactions, and analyzing financial data to understand the financial status of an individual or organization.