Warren Corporation's stock sells for $38.00 per share. The company wants to sell some 20-year, annual interest, $1,000 par value bonds. Each bond would have 85 warrants attached to it, each exercisable into one share of stock at an exercise price of $50.00. The firm's straight bonds yield 11.6%. Each warrant is expected to have a market value of $1.80 given that the stock sells for $38.00. What coupon interest rate must the company set on the bonds in order to sell the bonds-with-warrants at par? Do not round your intermediate calculations.
A. 8.64%
B. 9.60%
C. 11.04%
D. 10.08%
E. 11.52%
Answer: B
You might also like to view...
Marketing research provides information collected only on consumers. Information collected on other entities such as employees, members of distribution channels, or competitors would not be considered marketing research
Indicate whether the statement is true or false
Explain the buzz building form of viral marketing. What are the aims of viral marketing, and how are they accomplished? Give an example of a successful viral marketing campaign
What will be an ideal response?
Surveys indicate that lawyers:
a. prefer arbitration to mediation b. prefer mediation to arbitration c. prefer trials to mediation d. prefer trials to arbitration e. none of the other choices
802.11a is newer than the 802.11b standard
Indicate whether the statement is true or false