The value of the warrant drops every time when the underlying shares pay cash dividends.

Name: The value of the warrant drops every time when the underlying shares pay cash dividends.
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Question

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When the underlying shares pay cash dividends, the value of the warrant decreases because the holder of the warrant does not receive the dividend. This reduces the potential profit that the warrant holder could make by exercising the warrant and purchasing the underlying shares.

The Value of the Warrant Drops Every Time When the Underlying