Question: General Modems has five-year warrants that currently trade in the open market. Each warrant gives its owner the right to purchase one share of common

General Modems has five-year warrants that currently trade in the open market. Each warrant gives its owner the right to purchase one share of common stock for an exercise price of $55.

a. Suppose the stock is currently trading for $51 per share. What is the lower limit on the price of the warrant? What is the upper limit?

b. Suppose the stock is currently trading for $58 per share. What is the lower limit on the price of the warrant? What is the upper limit?

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