Valuation of Candidate Bond-Warrant Packages

Authors

Peter H. Ritchken
Shyanjaw Kuo

Document Type

Report

Publication Date

1-1-1986

Abstract

This paper presents a model for valuing bond-warrant financing packages. It shows how bonds and warrants can be simultaneously valued when the firm’s post financing value is not exogeneous. This simultaneous valuation allows the “sweetening” effect of warrants on debt to be quantified prior to the introduction of the issue. If financing decisions are made solely to change the capital structure of the firm, without increasing its size, then the model presented reduces to well known forms.

Keywords

Operations research, Bonds, Valuation, Finance

Publication Title

Technical Memorandums from the Department of Operations, School of Management, Case Western Reserve University

Issue

Technical memorandum no. 581

Rights

This work is in the public domain and may be freely downloaded for personal or academic use

Recommended Citation

Ritchken, Peter H. and Kuo, Shyanjaw, "Valuation of Candidate Bond-Warrant Packages" (1986). Research Reports from the Department of Operations. 634.
https://commons.case.edu/wsom-ops-reports/634