Rubash Company recently issued two types of bonds. The first issue consistedof 20-year straight (no warrants attached) bonds with a 9% annual coupon. The secondissue consisted of 20-year bonds with a 6% annual coupon with warrants attached. Bothbonds were issued at par ($1,000). What is the value of the warrants that were attached tothe second issue?
Debenture Valuation
A debenture is a private and long-term debt instrument issued by financial, non-financial institutions, governments, or corporations. A debenture is classified as a type of bond, where the instrument carries a fixed rate of interest, commonly known as the ‘coupon rate.’ Debentures are documented in an indenture, clearly specifying the type of debenture, the rate and method of interest computation, and maturity date.
Note Valuation
It is the process to determine the value or worth of an asset, liability, debt of the company. It can be determined by many processes or techniques. Many factors can impact the valuation of an asset, liability, or the company, like:
Rubash Company recently issued two types of bonds. The first issue consisted
of 20-year straight (no warrants attached) bonds with a 9% annual coupon. The second
issue consisted of 20-year bonds with a 6% annual coupon with warrants attached. Both
bonds were issued at par ($1,000). What is the value of the warrants that were attached to
the second issue?
Trending now
This is a popular solution!
Step by step
Solved in 6 steps with 5 images
