Essay
A bond/warrant package is priced to sell at face value of €1,000.Each bond comes with 50
detachable warrants.A warrant gives the owner the right to buy 1 share of equity at €20 per share.
The value of a warrant has been estimated at €2.The bonds mature in 20 years.Similar bonds
without warrants yield 10%.What is the bond's annual coupon?
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