Pricing of Warrants (illustrations)

Illustrations

AR warrant.

Exercise price $7.32
Current stock price $11.95
This warrant is in-the-money.
It must sell for at least its intrinsic value of $11.95-$7.32 = $4.63, which it does.
Market price of warrant $5.00, represents a $0.37 premium over the warrant's intrinsic value.


GC warrant

4 warrants to buy 1 share at $6.60
Current stock price $19.72
What is the minimum value for which this warrant should sell?

Current stock price > exercise price by $19.72-$6.60 - $13.12.
This amount would be the intrinsic value of the warrant if each warrant permitted the purchase of one share.

Because 4 warrants are required, the intrinsic value declines proportionately: $13.12/4 = $3.28.

This amount is the minimum value at which the warrant should sell.

http://www.klse.com.my/website/bm/market_information/market_statistics/equities/downloads/warrants_info.pdf