Assume That a Firm Has Warrants Outstanding That Allow the Holder

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\begin{array}{lcccccc}& ext { Beginning } & ext {Beginning} & ext { Number of } & ext {Shares } & ext { Ending } & ext {Ending }\&\underline{ ext { Investment}} &\underline{ ext { Price}} &\underline{ ext {Shares }}&\underline{ ext { Warrants}}&\underline{ ext { Price }}&\underline{ ext { Value }}\ ext { Stock } & \$ 1,000 & \$ 28 & 35.71 & \$ 44 & \$ 1,571.24 & \ ext { Convertible }\ ext { Bond }\ & \$ 1,000 & \$ 10 & 100.00 & \$ 22 & & \$ 2,200.00\end{array}

You would have a large total dollar profit investing in the warrant.
Leverage = 120%/57.15% = 2.10 times
Explanation: Stock went up 57.14%: ($44 - $28)/28 = 57.15%
Warrants went up 120%: ($22 - $10)/10 = 120%
Leverage = 120%/57.15% = 2.10 times
You would have a large total dollar profit investing in the warrant.

Assume That a Firm Has Warrants Outstanding That Allow the Holder

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