Assuming that speculative premium

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Reference no: EM132012026

Mr. John Hailey has $2,400 to invest in the market. He is considering the purchase of 40 shares of Comet Airlines at $60 per share. His broker suggests that he may wish to consider purchasing warrants instead. The warrants are selling for $15, and each warrant allows him to purchase one share of Comet Airlines common stock at $55 per share.

Assuming that the speculative premium remains $3.50 over the intrinsic value, how far would the price of the stock have to fall from $80 before the warrant has no value? (Do not round intermediate calculations and round your answer to 2 decimal places.)

Reference no: EM132012026

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