Firms issue warrants for which of the following reasons?
I. Allows the company to sell stock at a price above what other company stock is selling for.
II. Allows the company to choose which investors can buy the company's stock.
A) Only statement I is correct.
B) Only statement II is correct.
C) Both statements I and II are correct.
D) Neither statement I nor II is correct.

Question

Firms issue warrants for which of the following reasons? 
I. Allows the company to sell stock at a price above what other company stock is selling for.
II. Allows the company to choose which investors can buy the company's stock.
A) Only statement I is correct.
B) Only statement II is correct.
C) Both statements I and II are correct.
D) Neither statement I nor II is correct.

Quizplus · Accepted Answer

Warrants are issued to provide an incentive for investors to buy bonds or preferred stock, not to sell stock above market price or choose specific investors.

Firms Issue Warrants for Which of the Following Reasons