General Modems has 5-year warrants that currently trade in the open market. Each warrant gives its owner
Question:
General Modems has 5-year warrants that currently trade in the open market. Each warrant gives its owner the right to purchase one share of equity for an exercise price of £35.
(a) Suppose the equity is currently trading for £33 per share. What is the lower limit on the price of the warrant? What is the upper limit?
(b) Suppose the equity is currently trading for £39 per share. What is the lower limit on the price of the warrant? What is the upper limit?
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Lets analyze each part of the question a Equity price is 33 per share Lower limit on the price of th...View the full answer
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Related Book For 
Corporate Finance
ISBN: 9780077173630
3rd Edition
Authors: David Hillier, Stephen A. Ross, Randolph W. Westerfield, Bradford D. Jordan, Jeffrey F. Jaffe
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