All of the following are reasons why firms issue warrants EXCEPT ____.
A) to lower agency costs
B) to increase leverage at time of issue
C) to permit a company to sell common stock at a price above the price prevailing at the time of warrant issue
D) to allow a firm to sell common stock in the future without incurring underwriting costs at the time of sale

Question

Quizplus · Accepted Answer

Firms issue warrants to lower agency costs, sell common stock at a premium, and avoid underwriting costs. They do not issue warrants to increase leverage.

All of the Following Are Reasons Why Firms Issue Warrants