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A bond/warrant package is priced to sell at a face value of $1,000. Each bond comes with 50 detachable warrants. A warrant gives the owner
A bond/warrant package is priced to sell at a face value of $1,000. Each bond comes with 50 detachable warrants. A warrant gives the owner the right to buy one share of stock at $20 per share. The value of a warrant has been estimated at $2. The bonds mature in 20 years. Similar bonds without warrants yield 10 percent. What is the bond's annual coupon rate?
Can you help me answer this question? I see an example solving for the annual coupon, is that the same thing?
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