Multiple Choice
Consider a bond with an equity warrant.The warrant entitles the bondholder to buy 25 shares of the issuer at €50 per share for the lifetime of the bond.The bond is a 30-year zero coupon bond with a €1,000 par value that has a yield to maturity of i€ = 5 percent.The price of the bond is €500.What is the value of the warrant?
A) €231.38
B) €268.62
C) €500
D) none of the options
Correct Answer:
Verified
Correct Answer:
Verified
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