2.99 See Answer

Question: A bond with 20 detachable warrants has


A bond with 20 detachable warrants has just been offered for sale at $1,000. The bond matures in 20 years and has an annual coupon of $18. Each warrant gives the owner the right to purchase two shares of stock in the company at $45 per share. Ordinary bonds (with no warrants) of similar quality are priced to yield 5 percent. What is the value of one warrant?


2.99

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