Based on the information above:ii. Chris Johnson fund managers has proposed him to invest on JigsawBerhad where the firm is setting the terms on a new issue of bonds withwarrants. The bonds will have a 30-year maturity and annual interestpayments. Each bond will come with 20 warrants that give the holder theright to purchase one share of share per warrant. The fund managerestimate that the value of each warrant will be RM10.50. The interest rateis 10 percent. Calculate the coupon rate should be set on the bonds-withwarrants so that the package would sell for RM1,000. 2.(a) Chris Johnson has observed Kayangan Industries Berhad and HartalegaHolding Berhad share on the Bursa Malaysia Derivatives market. He isinterested to invest in those shares, and he has proposed to the fund managerto analyze which investment should he invest. The information for those sharesis as follows:(i) Kayangan Industries is currently trading at RM55 per share and does notpay dividend with the volatility of 35 percent. The current risk-free rate ofinterest is 11 percent with a strike price of RM53 that expires in fivemonths.(ii) Hartalega Holding has a share price at RM26.70 and it is expected to paya dividend of RM0.80 per share in May 2021. The strike price is RM28.50.The risk-free interest rate is 15.3 percent per annum and the variance is8.6 percent. The share will expire in 1 year 3 months.

The interest payment a bondholder receives from the bond's issuance date until its maturity date is…

Based on the information above: ii. Chris Johnson fund managers has proposed him to invest on Jigsaw Berhad where the firm is setting the terms on a new issue of bonds with warrants. The bonds will have a 30-year maturity and annual interest payments. Each bond will come with 20 warrants that give the holder the right to purchase one share of share per warrant. The fund manager estimate that the value of each warrant will be RM10.50. The interest rate is 10 percent. Calculate the coupon rate should be set on the bonds-withwarrants so that the package would sell for RM1,000.

Based on the information above: ii. Chris Johnson fund managers has proposed him to invest on Jigsaw Berhad where the firm is setting the terms on a new issue of bonds with warrants. The bonds will have a 30-year maturity and annual interest payments. Each bond will come with 20 warrants that give the holder the right to purchase one share of share per warrant. The fund manager estimate that the value of each warrant will be RM10.50. The interest rate is 10 percent. Calculate the coupon rate should be set on the bonds-withwarrants so that the package would sell for RM1,000.

Corporate Fin Focused Approach

5th Edition

ISBN:9781285660516

Author:EHRHARDT

Publisher:EHRHARDT

Chapter15: Capital Structure Decisions

Section: Chapter Questions

Problem 8P

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