A warrant loses some of its financial leverage when the stock rises far above the exercise price.

Name: A warrant loses some of its financial leverage when the stock rises far above the exercise price.
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Question

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When a stock rises far above the exercise price of a warrant, the holder can simply buy the stock on the open market rather than exercising the warrant. This reduces the demand for the warrant, which in turn decreases its financial leverage.

A Warrant Loses Some of Its Financial Leverage When the Stock