Which of the following statements is (are)correct concerning warrants?
I.Warrants are similar to put options.
II.Warrants are similar to call options.
III.When a warrant is exercised,the issuer is not involved in the transaction.
IV.When a warrant is exercised,the issuer must issue new shares of stock.

Question

Quizplus · Accepted Answer

Warrants are similar to call options because they give the holder the right to buy a company's stock at a specific price until the expiration date. When a warrant is exercised, the issuer must issue new shares of stock, which differentiates them from trading existing shares as in the case of stock options.

Which of the Following Statements Is (Are)correct Concerning Warrants