May 24, 2016

Homework Help: Fiance

Posted by Sundari on Saturday, June 16, 2012 at 7:40pm.

ABC stock sells for $22 bucks a share. The company wants to sell 20 year annual interest $1000 par value bonds. Each bond will have 75 warrants attached to it which is exercisable into one share of stock. The exercise price is $47.00. The stock sells for $42. The firmís straight bond yields 10%. Each warrant has a market value of $2 given that the stock sells for 42.00. What coupon interest rate should the company set on the bonds in order to sell the bonds with the warrants at par?

Answer This Question

First Name:
School Subject:

Related Questions

More Related Questions