Which of the Following Is a Characteristic Difference Between a Warrant

question 352

Multiple Choice

Which of the following is a characteristic difference between a warrant and a call option?

• A) A call option will typically have a longer maturity than a warrant.
• B) Call options are issued by individuals while warrants are issued by firms.
• C) Call options can be allowed to expire while warrants cannot.
• D) Neither warrants nor call options affect firm value.
• E) Unlike warrants, when call options are exercised, the number of shares of stock outstanding increases.

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Definitions:

Consolidated Balance Sheet

A financial statement that shows the financial position of a parent company and its subsidiaries as if they were a single entity.

Treasury Stock Approach

A method in finance that accounts for repurchased shares of a company's own stock as treasury stock, reducing the total equity in the balance sheet.

Attributed Ownership

The assignment of ownership interest in a company or property, often for the purpose of determining control or tax responsibilities.

Intra-Entity Gain

A gain recognized when transactions occur within segments of the same company, not usually recognized for external reporting purposes until realized with an external party.