HCB bonds with warrants have just been issued at a price of $ 9 5 0 .

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Question:

HCB bonds with warrants have just been issued at a price of $

950 .

Each bond has

30

warrants attached. The bonds are

20 -

year

4 %

coupon bonds with a face value of $

1000 .

HCB

'

s straight debt is trading at a yield to maturity of

7 % .

What is the implied value of each warrant? Assume annual coupons for simplicity. Answer: implied value of each warrant is $

8.827

Please let me know how to achieve the answer listed above.

Posted Date: May 18, 2024 07:07 PM

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HCB bonds with warrants have just been issued at a price of $ 9 5 0 .

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