Please Answer All The Questions And Explain

Warrants give bond investors the chance to profit from the firm's upside potential, leading some to compare warrants to a long-term call option. However, some factors distinguish warrants from call options. Which of the following statements about their differences is correct? Exercising warrants can lead to the dilution of existing shareholders' value. Exercising call options can lead to the dilution of existing shareholders' value. Triptych Food Corp, is issuing new 7 -year bonds with 19 warrants attached to each 51,000 par value bond. Triptych Food Corp. wanted to issue the bonds at par, but a straight-debt bond (without warrants) would have required a 14.20% coupon rate. Instead, the attached warrants allow Triptych Food Corp, to issue the bonds at par with a 8.52% coupon, Select the straight value of the bond and the value of each warrant in the following table. (Note: Assume that the company pays annuai coupons.) Select the stralight value of the bond and the value of each warrant in the following table. (Note: Assume that the company poys annual coupons.) The consensus opinion of analysts is that Triptych Food Corp. undervalued the warrants that it attached to its bonds. According to the analysts, is the coupon rate on Triptych Food Corp.'s bonds too high or too low? Too low Too high True or False: Warrants combined with debt instruments that can be removed by the holder and sold in the secondary markets separately are called detachable warrants. True False