Stark Industries wants to sell 15-year bonds that pay interest annually. The par value of bonds...

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Finance

Stark Industries wants to sell 15-year bonds that pay interestannually. The par value of bonds will be at $1,000. StarkIndustries stock is selling for $45 per share, and each bond issuedwill have 50 warrants attached to it. Each warrant is exercisableinto one share of stock at an exercise price of $50. StarkIndustries straight bonds yield 10%. Each warrant is expected tohave a market value of $4.00 given that the stock sells for $45. Inorder for Stark Industries to sell the bonds with warrants, whatamount should the coupon interest rate be at?
7.37%
8.34%
8.68%
9.18%
9.74%

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Stark Industries wants to sell 15-year bonds that pay interestannually. The par value of bonds will be at $1,000. StarkIndustries stock is selling for $45 per share, and each bond issuedwill have 50 warrants attached to it. Each warrant is exercisableinto one share of stock at an exercise price of $50. StarkIndustries straight bonds yield 10%. Each warrant is expected tohave a market value of $4.00 given that the stock sells for $45. Inorder for Stark Industries to sell the bonds with warrants, whatamount should the coupon interest rate be at?7.37%8.34%8.68%9.18%9.74%