Warren corporationrsquos stock sells for 42 per share the


Warren Corporation’s stock sells for $42 per share. The company wants to sell some 30-year, annual interest, $1,000 par value bonds. Each bond would have 50 warrants attached to it, each exercisable into one share of stock at an exercise price of $47. The firm’s straight bonds yield 12%. Each warrant is expected to have a market value of $2.00 given that the stock sells for $42. What coupon interest rate must the company set on the bonds in order to sell the bonds-with-warrants at par? 10.76% 11.65% 12.77% 11.05% 10.12%

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Financial Management: Warren corporationrsquos stock sells for 42 per share the
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