Which of the following is true of a stock right and a warrant?
A) They are similar to a put option.
B) They both result in new equity capital for a firm.
C) They are both issued with exercise or subscription prices below the prevailing market price of stock.
D) They both may be traded independently from the security to which they were attached.

Question

Quizplus · Accepted Answer

A stock right and a warrant are both issued with exercise or subscription prices below the prevailing market price of stock. Option A is incorrect because they are not similar to a put option. Option B is incorrect because only a stock right results in new equity capital for a firm, not a warrant. Option D is incorrect because a stock right cannot be traded independently from the security to which it was attached, while a warrant can.

Which of the Following Is True of a Stock Right