Which of the following would record lowest initial balance sheet liability: Choice: Zero-coupon, convertable bond, bond with warrants, conventional bond Many thanks in advance!
I’ll take a stab and say a zero-coupon bond. My reasoning would be that a zero-coupon bond’s return is entirely the difference between the issue price and par value, so assuming all the bonds have the same par value then the zero-coupon bond will have the lowest ‘issued’ value. Not 100% sure if this is correct though.
There is a chart in the FSA book, Reading 39, p. 486. Balance Sheet Liability Conventional bond = convertible bond > bond with warrants. So it has to be warrants of Zero-Coupon…
Many thanks newsuper and jmuc85!