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In: Finance

A) A bond with 30 detachable warrants has just been offered for sale at $1,000. The...

A)

A bond with 30 detachable warrants has just been offered for sale at $1,000. The bond matures in 20 years and has an annual coupon of $66. Each warrant gives the owner the right to purchase two shares of stock in the company at $56 per share. Ordinary bonds (with no warrants) of similar quality are priced to yield 9 percent.

What is the value of one warrant? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

B)

The following facts apply to a convertible bond making semiannual payments:

  

  Conversion price $ 37 /share
  Coupon rate 3.6 %
  Par value $ 1,000
  Yield on nonconvertible debentures of same quality 4 %
  Maturity 10 years
  Market price of stock $ 36 /share

  

What is the minimum price at which the convertible should sell? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

*PLZ ANSWER BOTH PARTS A &B **

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