If the common stock price goes up to 19 and the speculative, Finance Basics

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If the common stock price goes up to 19 and the speculative

Question: Eaton Hotel Corp. has warrants outstanding that allow the warrant holder to purchase 1.3 shares of stock per warrant at $9 per share (exercise price). The common stock is currently selling for $14.50, and the warrant is selling for $9.75.

a. What is the intrinsic (minimum value) of the warrant?

b. What is the speculative premium on this warrant?

c. If the common stock price goes up to $19 and the speculative premium goes down to $1.50, what will be the price of the warrant?

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Finance Basics: If the common stock price goes up to 19 and the speculative

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