All of the following are reasons why firms issue warrants except:
A)lowers agency costs
B)increases leverage at time of issue
C)permits a company to sell common stock at a price above the price prevailing at the time of warrant issue
D)allows 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 provide additional incentives to investors, allow them to raise capital without incurring high underwriting costs, and sell common stock at a price above the current market price. Increasing leverage is not a primary reason for issuing warrants.

All of the Following Are Reasons Why Firms Issue Warrants