Warrants and Convertibles

What is the most significant difference between call options and warrants from the firm's perspective?

A convertible bond has a face value of 1,000 dollars and a conversion ratio of 20. What is the conversion price?

The floor value of a convertible bond is defined as what?

According to the analysis of issuing convertible debt versus straight debt, in which scenario is the firm better off for having issued a convertible?

What is meant by the term 'dilution' in the context of exercising warrants?

A firm has 1,000 shares outstanding. It issues a warrant that can be exercised for one new share. If a call option on the firm (with no warrants outstanding) would result in a 600 dollar gain upon exercise, what would be the gain for an investor exercising the warrant, assuming all other terms are identical?

What is the optimal call policy for a firm with callable convertible bonds from the perspective of maximizing shareholder value?

Why do firms in the real world often wait to call their convertible bonds until the conversion value is significantly above the call price?

What does the 'free lunch' argument for issuing convertible bonds incorrectly assume?

A convertible bond has a face value of 1,000 dollars and a conversion price of 40 dollars. What is the bond's conversion ratio?

What is the 'straight bond value' of a convertible bond?

A firm issues convertible bonds. Which scenario represents a better outcome for the firm compared to having issued common stock instead?

What is one of the valid reasons for firms, particularly young and risky ones, to issue convertible bonds or bonds with warrants?

Microsoft issued convertible bonds with a conversion ratio of 29.9434 shares per bond and a face value of 1,000 dollars. At the time of issue, its common stock was trading at 25.11 dollars per share. What was the conversion premium for these bonds?

A company has two classes of investors: stockholders and bondholders. A warrant is issued to a third party, Ms. Fiske, giving her the right to buy one new share for 1,800 dollars. Before exercise, the firm's platinum is worth 4,200 dollars and there are two shares outstanding. What is the value of one of the original stockholder's shares after Ms. Fiske exercises her warrant?

How does a convertible bond differ from a bond issued with detachable warrants?

A company's convertible bond has a conversion ratio of 29.9434. The company's stock is currently selling for 25.74 dollars per share. What is the conversion value of the bond?

What is the concept of 'risk synergy' as a reason for issuing convertible bonds?

Why are convertible bonds sometimes considered a form of 'backdoor equity'?

A convertible bond has a straight bond value of 900 dollars and a conversion value of 950 dollars. What is the minimum value, or floor value, of this bond?

If a firm exercises its call provision on a convertible bond, what choice do the bondholders typically have?

A convertible bond has a conversion value of 1,200 dollars and the firm calls it at a call price of 1,100 dollars. This situation is referred to as what?

Which of the following characteristics is typical for firms that issue convertible bonds?

What is the primary motivation for an investor to accept a lower coupon rate on a convertible bond compared to a straight bond from the same issuer?

What is the primary way that convertible bonds can help mitigate agency costs between stockholders and bondholders?