The exercise of warrants creates new shares which:
A) increases the total number of shares but does not affect share value.
B) increases the total number of shares which reduces the individual share value.
C) does not change the number of shares outstanding similar to options.
D) increases share value because cash is paid into the firm at the time of warrant exercise.

Question

Quizplus · Accepted Answer

When warrants are exercised, new shares are issued, increasing the total number of shares outstanding. This dilutes the value of existing shares because the earnings and assets of the company are now spread over a larger number of shares.

The Exercise of Warrants Creates New Shares Which