In Comparing Warrants and Rights, They

question 39

Multiple Choice

In comparing warrants and rights, they:

• A)are similar in that the company can discriminate as to who buys new company stock.
• B)are similar in that they allow the purchase of existing stock only
• C)are different in that both allow the firm to receive additional funds at the time they are exercised.
• D)are different in that rights allow the holder of the right to vote in corporate elections based on the number of shares the right can purchase.

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Definitions:

Return on Equity

A measure of a corporation's profitability, calculated as net income divided by shareholders' equity, indicating how effectively equity is being used.

Return on Assets

A measurement of profitability indicating how efficiently a company uses its assets to generate earnings.

Return on Debt

A measure of a company's profitability based on its total debt, indicating how effectively a company uses its borrowing.

Bankruptcy Costs

The expenses associated with the legal process of declaring an entity unable to pay its debts, including court fees, lawyer fees, and administrative costs.