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3. A firm's capital structure of a company consists of 10,000,000 shares of common stock and 2,000,000 warrants. Each wa
Posted: Tue Jan 18, 2022 1:02 pm
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- 3 A Firm S Capital Structure Of A Company Consists Of 10 000 000 Shares Of Common Stock And 2 000 000 Warrants Each Wa 1 (40.75 KiB) Viewed 233 times
3. A firm's capital structure of a
company consists of 10,000,000 shares of common stock and 2,000,000 warrants. Each warrant gives its owner the right to purchase one share of newly issued common stock for an exercise price of $80. The warrants are European and will expire three years from today. The market value of the
company's assets is $500,000,000, and the annual variance of the returns on the firm's assets is 0.16. Treasury bills yield a continuously compounded annual interest rate of 5 percent. The
company does not pay a dividend. Find the value of a warrant.