22) Mr. John Hailey has $1000 to invest in the market. He is considering buying 50 shares of Comet Airlines at $20 per share. His broker suggests that he may wish to consider purchasing warrants instead. The warrants are selling for $5, and each warrant allows him to purchase one share of comet Airlines common stock at $18 per share.
Assuming the speculative premium remains $3.50 over the intrinsic value, how far would the price of the stock have to fall before the warrant has no value?
The formula to calculate warrant premium is
premium = 100 x ((warrant price + exercise price) - share price) / ...
How to calculate intrinsic value, current stock price?