for investment banking gurus

Jeff964 · 08-19-2005, 08:03 AM

What is simple way to correct a warrant's fair value?

Paul T · 08-19-2005, 08:16 AM

What do you mean by "correct"? Do you mean "compute"?

Jeff964 · 08-19-2005, 05:44 PM

yes, your're right, calculate a warrant's fair value.

competentone · 08-20-2005, 11:05 PM

A warrant on/involving what?

Generally, you'll want to look at the market value of what underlies the warrant and the conditions/terms for converting the warrant to it's underlying instrument(s). But that may not give you a "simple" answer to the "fair value" (markets are funny that way! See below for my question on what you mean by "fair value.")

Here's something to chew on if you want to get complicated (it might be easier if you can give some more details about the warrant you have in mind when asking your question):
http://stocks.rwe.onvista.de/encyclopedia.html?ID_DEFINITION=501&LETTER_START=I&LANG=en

Also, are you trying to determine "fair value" for some specific tax/legal reason, or are you just trying to get an idea about what a specific warrant is worth?

Jeff964 · 08-21-2005, 05:13 AM

I want to calculate the fair value/worth of a specific warrant listed in the stock market

304065 · 08-21-2005, 06:53 AM

Do a search for "black-scholes."

competentone · 08-21-2005, 07:18 AM

Quote:

Originally posted by Jeff964
I want to calculate the fair value/worth of a specific warrant listed in the stock market

If it's listed, then I'm sure it is being traded and you should be able to get a quote for the last trades. What company/stock? Do you have a symbol, or description, for the warrants?

Email me if you don't want to post it here.

Joe

TyFenn · 08-21-2005, 08:06 AM

If I remember correctly, the 'value' is very low for two reasons. One, they are non-income producing and secondly, they expire. That's why if you look at an annual report, for example, the market value is usually listed as zero. However, that being said, they do have value.

...a nice little dance around your question. Hong Kong is sweet though...

I'll try to tell you more a little later, like when I'm not hung-over. You probably know this stuff (that I mentioned) already...

TyFenn · 08-21-2005, 08:09 AM

black-scholes = Sorry - no matches. Please try some different terms.

Is there a specific forum I should use?

competentone · 08-21-2005, 08:32 AM

http://en.wikipedia.org/wiki/Black-Scholes

but I don't think general definitions is what Jeff is looking for.

Joe

Paul T · 08-21-2005, 08:33 AM

Check this site out for some good info on valuation http://pages.stern.nyu.edu/~adamodar/

If you are just trying to get an idea of worth, as someone said above, just check the quotes if it's a listed option. Otherwise, we need more details. Intrinsically. if the underlying stock price is more than the strike price on the warrant, then value is zero (not really, but valuation gets complicated fast). When does the warrant expire? Check the site above and also Black Scholes model. You can pm me details if you like and I'll try and help.