Concerning Warrants and Call Options,which of the Following Statements Generally

question 2

Multiple Choice

Concerning warrants and call options,which of the following statements generally is correct?

• A) The issue procedures for both are quite similar.
• B) When a call option is exercised, the firm must issue new stock.
• C) When a warrant is exercised, existing stock changes hands.
• D) Exercise of a call option does not affect share value, but warrant exercise does.
• E) None of these. is correct.

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Definitions:

Direct Materials

Raw materials that can be directly traced to the production of a specific product and are a significant portion of the production cost.

Period Costs

Costs that are expensed in the period in which they are incurred, rather than being capitalized or included in the cost of goods sold, such as selling, general, and administrative expenses.

Direct Materials

Raw materials that can be directly associated with the production of goods, clearly identifiable and allocable to specific products or jobs.

Factory Overhead

The total of all indirect costs associated with manufacturing, including indirect labor, materials, and expenses not directly tied to the production of goods.