E) Thompson Utilities Has Issued a Bond with 50 Warrants

question 10

Multiple Choice

E) Thompson Utilities has issued a bond with 50 warrants attached. The bonds have a 20-year maturity and an annual coupon of 12%, and they were issued at their $1,000 par value. The current yield on similar straight bonds is 15%. What is the implied value of each warrant?

• A) $3.76
• B) $3.94
• C) $4.14
• D) $4.35
• E) $4.56

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Definitions:

Pre-Post Design

A research method that involves measuring certain variables before and after an intervention to assess the changes that occur as a result of the intervention.

Control Group

In experimental research, a group of subjects that does not receive the treatment being tested, used as a benchmark to measure the effect of the treatment.

Data Collection Method

Techniques or procedures used to gather information or data for analysis in research, studies, or evaluations.

Kirkpatrick's Hierarchical Evaluation Model

A framework that assesses training programs through four levels: reaction, learning, behavior, and results, to measure their effectiveness.