When Warrants Are Exercised, What Happens as a Result of This

When warrants are exercised, what happens as a result of this?

A) The security associated with the warrant drops in value depending on the exercise price of the warrant.
B) Funds are transferred from the retained earnings account to common shares account for the market value of the shares.
C) The number of common shares outstanding changes.
D) There is no new capital for the firm because the warrants are exchanged for the common shares.