Both warrants and rights result in new capital equity. However, warrants are issued at an exercise price below the prevailing market price of the stock, whereas rights are issued at a subscription price above the prevailing market price.

Question

Quizplus · Accepted Answer

The statement is incorrect. Warrants are usually issued at a price above the prevailing market price, whereas rights are usually issued at a price below the prevailing market price.

Both Warrants and Rights Result in New Capital Equity