The Intrinsic Value of a Warrant to Buy 4 Shares

question 94

Multiple Choice

The intrinsic value of a warrant to buy 4 shares of Merton stock at $53 per share is $20. What is the current market price of Merton stock?

• A) $55.00
• B) $59.00
• C) $58.00
• D) None of these

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Definitions:

Subsidiary

A company that is completely or partially owned and controlled by another company, known as the parent company.

Income from Associates

Earnings generated from investments in affiliate or associate companies.

Dividend Income

Earnings distributed to shareholders from the profits of a company, acquired through the ownership of its shares.

Equity Method

An accounting technique used to record investments in other companies, where the investment is initially recorded at cost and subsequently adjusted to reflect the investor's share of the investee's profit or loss.