Market Price of Stock, Essay Example

The intrinsic value of a warrant to buy 5 shares of Jimmy Corp. stock at $70 per share is $25.  What is the current market price of Jimmy Corp. stock?

The variables in the equation to find the market price of this stock are as follows:

W = Warrant price

M = Market value of the stock

N = Number of shares represented by the warrant

I = Intrinsic value of the stock

All of the variables are known except for the Market value.  Those values are as follows:

W = 70

M = unknown (So, solve for M)

N = 5

I = 25

The intrinsic value equals the market value minus the warrant times the number of shares.  The formula would look like this:

I = (M-W)*N

Substituting values for alpha characters, the formula would look like this:

25 = (M-70)*5

Based on this formula, the Market price is $75