The current yield on similar straight bonds is 150 percent


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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Finance Basics: The current yield on similar straight bonds is 150 percent
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