A Bond with Five Detachable Warrants Has Just Been Offered

question 67

Multiple Choice

A bond with five detachable warrants has just been offered for sale for $1,000. The bond matures in eight years and has an annual coupon of $60. Each warrant grants its owner the right to purchase two shares of stock in the company at $15 per share. Ordinary bonds (with no warrants) of similar quality are priced to yield 6.4 percent. What is the value of one warrant?

• A) $2.45
• B) $5.67
• C) $12.25
• D) $24.45
• E) $4.89

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Definitions:

Anorexia Nervosa

A psychological eating disorder characterized by an intense fear of gaining weight and a distorted body image, leading to self-imposed starvation.

Food

Food consists of substances consumed to provide nutritional support for an organism, primarily consisting of plants, animals, or fungal origin.

Self-Control

The ability to regulate one's emotions, thoughts, and behaviors in the face of temptations and impulses.

Eating Binges

Periods of excessive food consumption generally not driven by hunger but emotional factors, often followed by guilt or shame.