What Is the Meaning of "Out-Of-The-Money Warrants

question 9

Multiple Choice

What is the meaning of "out-of-the-money warrants"?

• A)Warrants are out-of-the-money if the market price of the share exceeds the exercise price.
• B)Warrants are out-of-the-money if the market price of the share is less than the exercise price.
• C)Warrants are out-of-the-money if the market price of the share equals the exercise price.
• D)Warrants are out-of-the-money when the market price means that it will be exercised.

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Definitions:

Return On Equity

A measure of a corporation's profitability, calculated as net income divided by shareholder's equity, indicating how effectively management is using a company’s assets to create profits.

Total Equity

The total of all stockholder's equity (both preferred and common stock) plus retained earnings within a company.

Average Collection Period

A financial metric indicating the average number of days it takes for a firm to receive payments owed by its customers.

Net Sales

The total revenue from goods and services sold by a business, minus returns, allowances for damaged or missing goods, and discounts.