3. Warrants Aa Aa Warrants are long-term options to buy a stated number of common shares at a specified price that is generally attached to debt issues. Warrants are attached to debt in hopes of enticing investors to buy lower-coupon, long-term debt, because warrants give investors the chance to profit from the firm's upside potential. Warrants are like long-term: O Put options Call options Triptych Food Corp. is issuing new nine-year bonds with 21 warrants attached to each $1,000 par value bond. Triptych Food Corp. wanted to issue the bonds at par, but a straight-debt bond (without warrants) would have required a 12.20% coupon rate. Instead, the attached warrants allow Triptych Food Corp. to issue the bonds at par with a 7.32% coupon. Calculate the straight value of the bond and the value of each warrant in the following table. (Note: Assume that the company pays annual coupons.) Value What is the straight value of the bond? What is the value of each warrant? $14.75 $29.19 $27.95 Which kind of firm is more likely to issue bonds with attached warrants-$12.29rms or small, fast-growing firms