Abstract

A GIVEN COMMITMENT in common stock purchase warrants is working harder for the speculator than in the corresponding common stock. Offsetting this advantage one finds a premium that must be paid for a warrant. The premium is the difference between the market of a warrant plus the exercising price and the market of a share. So the question of whether the premium may be too small or too large arises in a particular case. Is a commitment to the warrants perferable to a commitment to the corresponding stock? While there do not seem to be any clear-cut mathematically-based answers, this article presents two approaches. Each has advantages. They are complementary rather than competing.

Keywords

WarrantStock (firearms)EconomicsCommon stockStock marketFinancial economicsStock priceBusiness

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Publication Info

Year
1957
Type
article
Volume
13
Issue
5
Pages
51-52
Citations
4
Access
Closed

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Russell J. Morrison (1957). The Warrants or the Stock?. Financial Analysts Journal , 13 (5) , 51-52. https://doi.org/10.2469/faj.v13.n5.51

Identifiers

DOI
10.2469/faj.v13.n5.51