Explain the following limits on the prices of warrants a
Explain the following limits on the prices of warrants:
a. If the stock price is below the exercise price of the warrant, the lower bound on the price of a warrant is zero.
b. If the stock price is above the exercise price of the warrant, the lower bound on the price of a warrant is the difference between the stock price and the exercise price.
c. An upper bound on the price of any warrant is the current value of the firm ’ s stock.

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