When warrants are exercised, the:
A) Earnings per share decrease.
B) Earnings per share remain constant.
C) Total equity in a firm remains constant.
D) Total equity in a firm decreases.
E) Number of bonds outstanding increases.

Question

Quizplus · Accepted Answer

When warrants are exercised, new shares are issued, which increases the total number of shares outstanding. This typically leads to a decrease in earnings per share (EPS) because the same amount of earnings is now spread over a larger number of shares.

When Warrants Are Exercised, The