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A company plans
[{"left":"A company plans to issue 10-year bonds with annual interest payments and with 40 warrants attached. Each warrant is expected to have a value of $1.50\n\n
","right":"http://student.land/a-company-plans-to-issue-10-year-bonds-with-annual-interest-payments-and-with-40-warrants-attached-each-warrant-is-expected-to-have-a-value-of-1-50/\n\n1. A company plans to issue 10-year bonds with annual interest payments and with 40 warrants attached. Each warrant is expected to have a value of $1.50. A similar straight-debt issue would require an 11% coupon. What coupon rate should be set on the bonds-with-warrants so that the package will sell for $1,000?\n2. Use the following data for Marcus, Inc. to determine the minimum price (or \"floor price\") at which the company's convertible bonds should sell. Round to the nearest whole dollar.\n\nMaturity: 20 years\n\nStock price: $40.00\n\nPar value: $1,000\n\nConversion price: $45\n\nAnnual coupon: 8%\n\nStraight debt yield: 10%\n\n3. Sullivan Corporation issued 12% convertible debentures that were issued at par and currently sell for $1,075. Each debenture can be converted into 25 shares of common stock. The company's current stock price is $42. What is the conversion value of the bond?\n4. Cameron Corp. is evaluating whether to issue bonds or preferred stock. Which of the following statements is correct? \n\nA. Bonds can have a convertible feature, but preferred stock cannot.\n\nB. Interest on bonds is tax deductible\n\nC. Dividends on preferred stock are tax deductible\n\nD. Preferred stock is riskier to the company than bonds.\n\nE. None of the above. \n\n5. Cambridge, Inc. is a large public company that operates throughout the world. It uses a centralized approach and makes most of the decisions for its many subsidiaries. Bridgeston is also a large public company that operates throughout the world. It uses a decentralized approach and its subsidiaries make most of their own decisions. Which of the following is correct?\n\nA. Agency costs would be the same for both companies\n\nB. Agency problems would probably be less pronounced for Cambridge because it is less likely that subsidiary decisions would conflict with the parent\n\nC. Agency problems would probably be less pronounced for Bridgeston because it is less likely that subsidiary decisions would conflict with the parent\n\nD. Agency problems would be the same for both companies\n\nE. None of the above.\n\n6. Barriers to hostile takeovers include\n\nA. Targeted share repurchases\n\nB. Shareholder rights provisions\n\nC. Poison pills\n\nD. All of the above\n\nE. None of the above"},{"left":"","right":""},{"left":"","right":""},{"left":"","right":""}]
A company plans to issue 10-year bonds with annual interest payments and with 40 warrants attached. Each warrant is expected to have a value of $1.50
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Andrew Holston
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