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A firm could have issued straight debt at a 12% interest rate. However, with warrants attached, the bonds were sold to yield 10%. Someone buying
A firm could have issued straight debt at a 12% interest rate. However, with warrants attached, the bonds were sold to yield 10%. Someone buying the bonds at their $1,000 initial offering price would thus be receiving a package consisting of a 10% annual coupon rate, 20-year bond plus 20 warrants. What is the value of each warrant?
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