The Exercise Price of the Canadian Dairy Company Is $17

Multiple Choice

The exercise price of The Canadian Dairy Company is $17. You purchase the warrants for $4.00 each when Canadian Dairy's stock price is $20.00 per share. Each warrant entitles you to purchase one share of CDC stock. Calculate your percentage gain assuming the warrant premium drops by 50% and you sell your warrants when the stock reaches $30.00 per share.

A) 37.5%
B) 87.5%
C) 137.5%
D) 237.5%
E) 337.5%