Susan is evaluating the Burton Tool Company’s common stock and warrants in order to choose the best investment. The firm’s stock is currently selling for $50 per share; its warrants to purchase three shares of stock at $45 per share are selling for $20. Ignoring transaction costs (brokerage fees), Susan has $8,000 to invest. She is quite optimistic with respect to Burton because she has certain “inside information” about the firm’s prospects with respect to a large government contract. Insider trading using information that the general public is not readily aware of to buy or sell securities is a federal crime - (ask Martha Stewart). a. How many shares of stock and how many warrants can Susan purchase? b. Suppose Susan purchased the stock, held it one year, the sold it for $60 per share. Ignoring brokerage fees and taxes, what total gain would she realize? Express your answer in both a dollar amount and percentage gain figures. c. Suppose Susan purchased warrants and held them for one year, and the market price of the stock increased to $60 per share. Ignoring brokerage fees and taxes, what would be her total gain if the market value of warrants increased to $45 and she sold out? Express your answer in both a dollar amount and percentage gain figures. d. What benefit, if any would the warrants provide? Are there any differences in the risk of these two alternative investments? Explain. e. Susan is at her office happily day dreaming about what she is going to do with the extra money she now has as a result of this recent securities transaction. A man in a dark suit shows up at her desk area and presents a badge while announcing that he is a federal agent with the Securities and Exchange Commission. What is likely to happen next?