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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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    https://brainmass.com/business/bond-valuation/implied-value-of-warrant-296329

    Solution Preview

    Please see the attached file.

    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.   ...

    Solution Summary

    Calculates the implied value of warrant issued with a bond.

    $2.19

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