(a) A-Go-Go Holdings Limited just issued a zero coupon convertible bond due in 10 years. The face value is $1,000. The conversion ratio is 25 shares. The current stock price is $12 per share. Each convertible is trading at $400. The appropriate discount rate is 10%

Identify: (i) the straight bond value (SBV), (ii) conversion value (iii)conversion price (iv)conversion premium (v) option value of the bond.

(b) Kida Consultants has 100,000 shares of stock outstanding. The firm's value net of debt is $2 million. Kida has 1,000 warrants outstanding with an exercise price of $18, where each warrant entitles the holder to purchase one share of stock. Calculate:

(i) thesharepriceafterwarrantexercising. (ii) the gain from exercising a single warrant.