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Bonds with detachable warrants are issued with a face amount of $100000 at 105. Each $1000 bond has 10 warrants attached. Each warrant entitles the
Bonds with detachable warrants are issued with a face amount of $100000 at 105. Each $1000 bond has 10 warrants attached. Each warrant entitles the holder to purchase one share of $1 per common stock for $50.
Can you give me more explanation about the following results?
I don't know how they found the following results:
Fair Values: Bonds w/o warrants = $98000
Warrants = $6000
Allocation to the bonds: ($98000/104000)*$105000 = $98942
Allocation to the warrants: (6000/104000)* $105000= $6058
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