Consider a bond with an equity warrant

Assignment Help Financial Accounting

Reference no: EM13942097

Consider a bond with an equity warrant. The warrant entitles the bondholder to buy 25 shares of the issuer at €50 per share for the lifetime of the bond. The bond is a 30-year zero coupon bond with a €1,000 par value that has a yield to maturity of i€ = 5 percent. The price of the bond is €500. What is the value of the warrant?

A)€231.38

B)€268.62

C)€500

D) none of the above

Reference no: EM13942097

Questions Cloud

What is the collection efficiency : If the wall is fabricated from a high-temperature material for which k = 15 W/m · K, what is the minimum thickness L needed to ensure that the outer surface temperature does not exceed Ts,o = 1000 K? What is the collection efficiency associated wi..

A holder would not exercise an in-the-money option : The option seller, also called the option writer, sells (or writes) the option and has a short position in the contract. When the exercise price of an option is equal to the current price of the stock, the option is said to be at-the-money. A holder ..

Calculate the vertical and horizontal components of u : Calculate the vertical and horizontal components of u (the launch velocity) using the following trigonometric identities:

What percentage of their claims should the unsecured : Prepare a statement of realization and liquidation for the period just described. What percentage of their claims should the unsecured creditors receive?

Consider a bond with an equity warrant : Consider a bond with an equity warrant. The warrant entitles the bondholder to buy 25 shares of the issuer at €50 per share for the lifetime of the bond.

Calculate operating cash flow for year by using all methods : The owner of a bicycle repair shop forecasts revenues of $212,000 a year. Variable costs will be $63,000, and rental costs for the shop are $43,000 a year. Depreciation on the repair tools will be $23,000. The tax rate is 40%. Calculate operating cas..

Predict the associated effect on an organization : Risk assessment applications help predict the associated effect on an organization if a risk occurs. COBRA and I2S2 are two risk assessment applications that are explained in the textbook.

Calculate weighted cost of capital for tier of financing : Daisy Corporation is constructing its cost of capital. Its target capital structure is 30 percent debt and 70 percent common equity. It can raise up to $40.0 million in bank loans at a before tax cost of 10% but any debt beyond $40.0 million will hav..

Write a business plan for a small business : Write a business plan for a small business: Type of Business: G.I. Jane Mobile Detail & Carwash, It's a new business first time the owner has operated this sort of business, but she has a manager that she's going to employ that has been in busines..

User Account

All Pages