Ms. Higden has been offered yet another incentive scheme (see Section XXXXXXXXXXShe will receive a bonus of $500,000 if the stock price at the end of the year is $120 or more; otherwise she will...

Ms. Higden has been offered yet another incentive scheme (see Section 20.2). She will receive a bonus of $500,000 if the stock price at the end of the year is $120 or more; otherwise she will receive nothing.
(a) Draw a position diagram illustrating the payoffs from such a scheme.
(b) What combination of options would provide these payoffs? Look again at question 2. Suppose that Moose now forecasts the following dividend payments:


Reestimate the market values of the warrant andstock.