Warrants as compared to convertible bonds:

Question

Quizplus · Accepted Answer

Warrants and convertible bonds both provide the option to purchase the underlying stock at a later date, but convertible bonds also have a fixed regular coupon payment while warrants do not offer a regular return. Convertible bonds can also trade at a premium due to the added optionality, while warrants are typically issued by the company with their consent. However, when warrants are exercised, the company receives cash flow, while convertible bonds simply convert into stock. Therefore, D is the best choice.

Warrants as Compared to Convertible Bonds