Which one of the following is a correct statement?
A) Exercise of warrants results in more outstanding shares of stock, while exercise of listed call options does not.
B) A convertible bond consists of a straight bond plus a specified number of detachable warrants.
C) Call options always have an initial maturity greater than 1 year, while warrants have an initial maturity less than 1 year.
D) Call options may be convertible into the stock, while warrants are not convertible into the stock.

Question

Quizplus · Accepted Answer

Exercise of warrants indeed results in the issuance of new shares, increasing the number of outstanding shares, whereas exercising listed call options involves the transfer of existing shares without increasing the total number of shares outstanding.

Which One of the Following Is a Correct Statement