Question: Calculating Warrant Values A bond with 20 detachable warrants has just been offered for sale at $1,000. The bond matures in 15 years and has

Calculating Warrant Values A bond with 20 detachable warrants has just been offered for sale at $1,000. The bond matures in 15 years and has an annual coupon of $105. Each warrant gives the owner the right to purchase two shares of stock in the company at $15 per share. Ordinary bonds (with no warrants) of similar quality are priced to yield 12 percent. What is the value of one warrant?

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The value of the bond without warrants is Straight bond value 105PVIFA 1215 10001... View full answer

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