Adding warrants as a 'sweetener' to bonds will:
A)reduce the value of the bond.
B)increase the coupon rate of the bond.
C)increase the value of the bond.
D)make the bond more risky.

Question

Quizplus · Accepted Answer

Adding warrants as a sweetener to bonds increases the value of the bond because the holder of the bond now has the option to purchase additional shares of stock at a specified price. This increases the potential return for the bondholder and therefore makes the bond more attractive.

Adding Warrants as a 'Sweetener' to Bonds Will