Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Transcribed Image Text:Calculate the implied price of each warrant for each of
the bonds shown in the following table.
Price of bond
with warrants
attached
Coupon
interest rate
Iaterest rate
on equal-risk
straight bond
Number
of warrants
attached to bond
Years to
Bond
Par value
(paid annually)
maturity
$1,000
1,000
A.
$1,000
12 %
13%
15
10
1,100
9.5
12
10
30
C
500
500
10
11
20
1,000
1,000
11
12
20
20
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