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