12. ABC Company recently issued two types of bonds. The first
issue consisted of 20 year straight debt with an 8 percent annual
coupon. The second issue consisted of 20 year bonds with a 6
percent annual coupon and attached warrants. Both issues sold at
their $1,000 par values. What is the implied value of the
warrants attached to each bond?
issue consisted of 20 year straight debt with an 8 percent annual
coupon. The second issue consisted of 20 year bonds with a 6
percent annual coupon and attached warrants. Both issues sold at
their $1,000 par values. What is the implied value of the
warrants attached to each bond?