FI hw4 - Siming Zhu AEM 4260 Fixed Income Homework #5...

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Siming Zhu AEM 4260 – Fixed Income Homework #5 11. What are the different types of warrants that have been included in Eurobond offerings? There are three main types of warrants that have been included in Eurobond offerings: equity warrant, debt warrant, and currency warrant. An equity warrant allows the warrant owner to buy the common stock of the issuer at a specified price is the warrant owner chooses to. A debt warrant enables the warrant owner to buy additional bonds from the issuer at the same price and yield as the host bond. In this case, owners of debt warrants will benefit if there is a decrease in interest rates because it will allow the warrant owner to buy a bond with a higher coupon from the issuer. A currency warrant permits the owner to exchange one currency for another at a set exchange rate. Currency warrants offers the bondholder protection from a depreciation of the foreign currency in which the bond’s cash flows are denominated. In addition, most warrants are detachable from the
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FI hw4 - Siming Zhu AEM 4260 Fixed Income Homework #5...

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