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Bombardier Inc's bond with 25 detachable warrants has just been offered for sale at $1,000. The bond matures in 20 years and has an annual
Bombardier Inc's bond with 25 detachable warrants has just been offered for sale at $1,000. The bond matures in 20 years and has an annual coupon of $105. Each warrant gives the owner the right to purchase two shares of Bombardier stock at $20 per share.
Ordinary bonds (with no warrants) of similar quality are priced to yield 17 percent. What is the value of one warrant?
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