Warrants attached to a bond:
A)are used as sweeteners to make bond issues less attractive.
B)will typically increase the risk of the bond.
C)will typically decrease the risk of the bond.
D)all of the above.

Question

Quizplus · Accepted Answer

Warrants attached to a bond typically decrease the risk of the bond, as they provide the bondholder with the option to purchase additional shares of the issuer's stock at a set price. This potential for additional gains can offset any potential losses from the bond. They are not used as sweeteners to make bond issues less attractive and do not typically increase the risk of the bond.

Warrants Attached to a Bond