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Implied value of warrant

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Charles River Company has just sold a bond issue with 10 warrants attached. The bonds have a 20-year maturity, an annual coupon rate of 12.0 percent, and they sold at their $1,000 par value. The current yield on similar straight bonds is 15.0 percent. What is the implied value of each warrant?

a. $18.78

b. $19.24

c. $20.21

d. $21.20

e. $22.56

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Calculates the implied value of warrant issued with a bond.

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Charles River Company has just sold a bond issue with 10 warrants attached.  The bonds have a 20-year maturity, an annual coupon rate of 12.0 percent, and they sold at their $1,000 par value.  The current yield on similar straight bonds is 15.0 percent.  What is the implied value of each warrant?
            a.   $18.78

            b.   $19.24

            c.   $20.21

            d.   ...

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