Shearson PLC's stock sells for $42 per share. The company wants to sell some 15-year, annual interest, $1,000 par value bonds. Each bond will have attached 66 warrants, each exercisable into one share of stock at an exercise price of $47. Shearson's straight bonds yield 11 percent. The warrants will have a market value of $2.50 each when the stock sells for $42. What is the current value of the warrants attached to each bond? Question 18 options: $117.5 $27.5 $165 $105
Shearson PLC's stock sells for $42 per share. The company wants to sell some 15-year, annual interest, $1,000 par value bonds. Each bond will have attached 66 warrants, each exercisable into one share of stock at an exercise price of $47. Shearson's straight bonds yield 11 percent. The warrants will have a market value of $2.50 each when the stock sells for $42. What is the current value of the warrants attached to each bond? Question 18 options: $117.5 $27.5 $165 $105
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
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