A Warrant That Does Not Expire Until Several Years into the Future

question 17

Multiple Choice

A warrant that does not expire until several years into the future provides its owner the opportunity to buy a stock. If the stock price rises, the warrant will probably sell for

• A) less than its intrinsic value.
• B) exactly its intrinsic value.
• C) more than its intrinsic value.
• D) less than or equal to its intrinsic value.

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Definitions:

Income

The money received, especially on a regular basis, for work or through investments.

Marginal Utility

The increased enjoyment or value one gets from the consumption of an extra unit of a good or service.

Marginal Utility

The added satisfaction or usefulness obtained from using one more unit of a product or service.

Total Utility

The total satisfaction or benefit received by consuming a particular quantity of a good or service.