The sale of call options cannot give rise to the problem of dilution of stockholders' earnings,but the use of warrants can.

Name: The sale of call options cannot give rise to the problem of dilution of stockholders' earnings,but the use of warrants can.
Brand: Quizplus
Rating: 4.9 (54 reviews)

Question

Quizplus · Accepted Answer

Call options do not create new shares when exercised, thus they do not dilute existing shareholders' earnings. Warrants, however, can lead to the issuance of new shares upon exercise, potentially diluting existing shareholders' earnings.

The Sale of Call Options Cannot Give Rise to the Problem