A non-callable bond has 10 years to maturity. It is a zero-coupon bond with effective annual yield

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A non-callable bond has 10 years to maturity. It is a zero-coupon bond with effective annual yield of 15%.

A callable bond is also a zero coupon bond. Effective annual yield is not announced. This bond is callable at par anytime prior to maturity (the coupons are not accrued, because it has no coupon).

The warrant allows the warrant holder to exchange warrant+callable bond for the mentioned non-callable bond at anytime prior to maturity.

Find the fair market value of the warrant?

Related Book For answer-question

Principles of Finance

ISBN: 978-1285429649

6th edition

Authors: Scott Besley, Eugene F. Brigham

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Posted Date: Jun 13, 2023 12:43 AM

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A non-callable bond has 10 years to maturity. It is a zero-coupon bond with effective annual yield

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To find the fair market value of the warrant we need to compare the value of the warrantcallable bond ... View the full answer

Principles of Finance

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