Begin with the same setup as Example 22.1: Bigcos investment in Drugco for equity plus warrants. Now,
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Begin with the same setup as Example 22.1: Bigco’s investment in Drugco for equity plus warrants. Now, in addition to the strike price of $20 after two years and $50 after five years, assume that the warrants can also be exercised after three years at a strike of $30 or after four years at a strike of $40. Assume everything else from the problem is unchanged. Use bintree to solve for the value of Bigco’s warrants.
Strike PriceIn finance, the strike price of an option is the fixed price at which the owner of the option can buy, or sell, the underlying security or commodity.
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As compared to example 222 we need only change the entries in columns 36 thr...View the full answer
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