Consider a 15-year bond with 15 warrants. Each warrant has a strike price of $30 and 10 years until expiration. Each warrant value is estimated to be $6. The yield to maturity of a 15-year bond without warrants is 12%. What coupon rate must be set on the bond with warrants to make the total package sell for $1,000?

12%

13.75%

11.50%

10.68%

There are four types of hybrid securities: Preferred stock, Class A common stock, warrants, and convertibles.

True

False