The gain from exercising a warrant is similar to the gain from exercising a call option except:
A) the gain on a warrant is greater by the fraction of warrant shares divided by total shares.
B) the gain on a warrant is limited by the firm's value after being reduced by the debt of the firm.
C) the gain on a warrant is decreased by the fraction of original shares divided by total post exercise shares.
D) Both the gain on a warrant is greater by the fraction of warrant shares divided by total shares; and the gain on a warrant is limited by the firm's value after being reduced by the debt of the firm.
E) Both the gain on a warrant is limited by the firm's value after being reduced by the debt of the firm; and the gain on a warrant is decreased by the fraction of original shares divided by total post exercise shares.
Correct Answer:
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