Essay
A warrant is attached to a $1,000 par, 10 percent, 15-year bond, paying annual interest and having 10 warrants attached for the purchase of the firm's stock. The bonds were initially sold for $1,020. When issued similar risk straight bonds were selling to yield a 12 percent rate of return. Calculate the implied price of the warrant.
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($1,000 × (1.12)-15) + ($100/.12)...View Answer
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