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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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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