Warrants are long-term options to buy a stated number of common shares at a specified price that is generally attached to debt issues. Which of the following reasons best explains why some firms will choose to attach warrants to long-term bonds? Bondholders are usually willing to accept a lower coupon rate when warrants are attached to bonds. If bondholders exercise their warrants, the company will no longer have a debt obligation to those bondholders. Triptych Food Corp. is issuing new nine-year bonds with 21 warrants attached to each $1,000 par value bond. Triptych Food Corp. wanted to issue the bonds at par, but a straight-debt bond (without warrants) would have required a 14.20% coupon rate. Instead, the attached warrants allow Triptych Food Corp. to issue the bonds at par with a 8.52% coupon. Calculate the straight value of the bond and the value of each warrant in the following table. (Note: Assume that the company pays annual coupons.) Value What is the straight value of the bond? $444.17 What is the value of each warrant? $502.70 $418.38 $721.08 The investment banking firm helping Triptych Food Corp. issue their bonds with the warrants attached was responsible for estimating the straight-debt value and the value of the warrants. Which was harder for the investment banking firm to estimate accurately? The value of the warrants The straight-debt value O