6. Jacobs Company has warrants outstanding, which are selling at a $1.00 premium above intrinsic value. Each warrant allows its owner to purchase one share of common stock at $26. The common stock currently sells for $31.

a) calculate the intrinsic value of the warrant.

b) calculate the warrant price.

c) if the stock price increases to $36 per share, and speculative premium remains $1, what is the new warrant price?

d) if you wanted to invest $1,200 in buying warrants at the price you calculated in part b), how many warrants would you be able to buy?

e) what would be your return on investment (%) if you sold warrants at the new price you calculated in part c)?