Which of the Following Statements About Warrants Is True

question 298

Multiple Choice

Which of the following statements about warrants is true?

• A) Warrants are usually issued in conjunction with a security offering.
• B) Warrants are issued by individuals.
• C) Warrant exercise will not increase the number of shares outstanding.
• D) Warrant exercise will increase earnings per share.
• E) Warrants may not be traded separately from the security with which they were issued.

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Definitions:

FASB

The Financial Accounting Standards Board, an organization responsible for setting and improving financial accounting and reporting standards in the U.S.

IASB

The International Accounting Standards Board, responsible for developing and enforcing the International Financial Reporting Standards (IFRS).

Fair Value Measurement

An accounting approach that provides an estimate of the price at which an asset could be exchanged or a liability settled, based on current market conditions.

Financial Instruments

Contracts that give rise to both a financial asset of one entity and a financial liability or equity instrument of another entity, such as stocks, bonds, or derivatives.