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A bond with 20 detachable warrants has just been offered for sale at $1,000. The bond matures in 30 years and has an annual coupon
A bond with 20 detachable warrants has just been offered for sale at $1,000. The bond matures in 30 years and has an annual coupon of $60. Each warrant gives the owner the right to purchase two shares of stock in the company at $50 per share. Ordinary bonds (with no warrants) of similar quality are priced to yield 7 percent. |
What is the value of one warrant? |
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