Curry Corporation Is Setting the Terms on a New Issue

question 52

Multiple Choice

Curry Corporation is setting the terms on a new issue of bonds with warrants.The bonds will have a 30-year maturity and annual interest payments.Each bond will come with 20 warrants that give the holder the right to purchase one share of stock per warrant.The investment bankers estimate that each warrant will have a value of $10.00.A similar straight-debt issue would require a 10% coupon.What coupon rate should be set on the bonds-with-warrants so that the package would sell for $1,000?

• A)6.75%
• B)7.11%
• C)7.48%
• D)7.88%
• E)8.27%

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Definitions:

Flexor Carpi Radialis

A muscle in the forearm that assists in bending the wrist toward the thumb side.

Flexor Carpi Ulnaris

A muscle of the forearm that acts to flex and adduct the hand at the wrist.

Corrugator Supercilii

A facial muscle located beneath the forehead skin, responsible for drawing the eyebrows together and downward.

Orbicularis Oculi

A facial muscle that encircles the eye socket and is responsible for closing the eyelids.