Preissle Company, Wants to Sell Some 20-Year, Annual Interest, $1,000

question 28

Multiple Choice

Preissle Company, wants to sell some 20-year, annual interest, $1,000 par value bonds.Its stock sells for $42 per share, and each bond would have 75 warrants attached to it, each exercisable into one share of stock at an exercise price of $47.The firm's straight bonds yield 10%.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?

• A) 7.83%
• B) 8.24%
• C) 8.65%
• D) 9.08%
• E) 9.54%

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Definitions:

Lateral Hypothalamus

A region of the hypothalamus involved in hunger and thirst regulation, as well as other aspects of motivated behavior.

Obesity

Excessive accumulation of body fat.

Anorexia

An eating disorder characterized by an abnormally low body weight, intense fear of gaining weight, and a distorted perception of body weight or shape.

Overeating

Consuming food in quantities greater than the body's energy requirements, often leading to weight gain and potentially obesity.