Warrants are
A) long-term options to sell shares of the issuing firm's stock.
B) fairly stable, low-risk investments.
C) investments whose value is directly related to the price of the underlying stock.
D) structured to sell for precisely their intrinsic value.

Question

Quizplus · Accepted Answer

Warrants are investment instruments whose value is directly related to the price of the underlying stock. They give the holder the right to buy shares of the issuing firm's stock at a specified price. Warrants can be volatile and carry a high degree of risk, but they can also offer higher potential returns. They are not long-term options to sell shares of the issuing firm's stock, are not necessarily stable or low-risk, and may not necessarily sell for their intrinsic value.

Warrants Are