Since warrants and convertibles give holders the right to exchange for their underlying stock,they should represent the same sources of financing.

Question

Quizplus · Accepted Answer

Warrants and convertibles, while both providing the option to convert into the underlying stock, come from different sources of financing. Warrants are often issued by companies as part of a stock or bond offering, essentially as a sweetener to make the primary security more attractive. Convertibles, on the other hand, are a type of bond or preferred stock that can be converted into a predetermined number of common stock or equity shares. The key difference lies in the nature of the primary security: warrants are attached to securities but are separate instruments, whereas convertibles are securities that inherently have the conversion feature built into them.

Since Warrants and Convertibles Give Holders the Right to Exchange