Neubert Enterprises recently issued $1,000 par value 15-year bonds with a5% coupon paid annually and warrants attached. These bonds are currentlytrading for $1,000. Neubert also has outstanding $1,000 par value 15-yearstraight debt with a 7% coupon paid annually, also trading for $1,000.What is the implied value of the warrants attached to each bond?
Neubert Enterprises recently issued $1,000 par value 15-year bonds with a5% coupon paid annually and warrants attached. These bonds are currentlytrading for $1,000. Neubert also has outstanding $1,000 par value 15-yearstraight debt with a 7% coupon paid annually, also trading for $1,000.What is the implied value of the warrants attached to each bond?
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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Neubert Enterprises recently issued $1,000 par
5% coupon paid annually and warrants attached. These bonds are currently
trading for $1,000. Neubert also has outstanding $1,000 par value 15-year
straight debt with a 7% coupon paid annually, also trading for $1,000.
What is the implied value of the warrants attached to each bond?
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