All of the following are motivation for firms to issue warrants except:
A) may allow the firm to issue debt at lower rate when warrants are included
B) used as sweetener during merger negotiations
C) more desirable than convertible securities for creating new common stock
D) all of these are motivations

Question

Quizplus · Accepted Answer

All of the other options are motivations for firms to issue warrants. Warrants may allow the firm to issue debt at a lower rate when warrants are included because lenders may view the warrants as a form of equity, thereby reducing the risk of default. Warrants can also be used as a sweetener during merger negotiations to make a deal more attractive to the other party. Additionally, warrants may be more desirable than convertible securities for creating new common stock because they do not dilute the ownership of existing shareholders until the warrants are exercised.

All of the Following Are Motivation for Firms to Issue