(Answered) Question warrants for the purchase of shares of child corp

Finance

Question: Warrants for the purchase of shares of Child Corp. entitle the holder to purchase 3 shares per warrant at $ 12.50 per share. The warrants currently have a floor value of V*w = $7 .50.

(a) Compute the current market price per share.

(b) Calculate the percentage change in the warrants' floor value for a ± 1 5-percent change in the market price of the shares.

(c) Assume that the share price moves to $11. Compute the new floor value of the warrants and the effect of a ± 1 5-percent change in the new share price on the warrants' floor price.

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