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A Warrant Is the Option to Buy One Share of Stock

question 2

Essay

A warrant is the option to buy one share of stock at $40. It expires after one year and currently sells for $10. The price of the stock is $32. What is the maximum possible profit if an investor buys one share of stock and shorts one warrant? What is the range of stock prices that yields a profit on this position?


Definitions:

Managerial Position

A role or job that involves overseeing and directing the operations and activities within an organization.

Demands

The requirements or needs that must be met by individuals or systems, often within a specific time frame or under certain conditions.

Responsibilities

Obligations or duties that individuals, groups, or organizations are expected to fulfill.

Manager's Job

The role or duties assigned to an individual responsible for directing and overseeing the work of others within an organization, including planning, decision making, and coordinating.

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