Warrants are similar to options, in that the value of the warrant is limited by:
A)Expiring worthless if the share price is below the total warrant exercise price.
B)The trading capabilities of the exchange used.
C)The price of the underlying equity divided by the number of warrants needed to
Purchase a share.
D)Both A and C.
E)Both B and C.

Question

Quizplus · Accepted Answer

Warrants have a limited lifespan and will expire worthless if the share price is below the total warrant exercise price (Option A). The value of the warrant is also directly tied to the price of the underlying equity, and the number of warrants needed to purchase a share (Option C). Therefore, the correct answer is D, as both options A and C are correct. Option B is not directly related to the limitation of the warrant's value.

Warrants Are Similar to Options, in That the Value of the Warrant