Which of the Following Statements Is Correct

question 56

Multiple Choice

Which of the following statements is correct?

• A) A warrant is basically a long-term option that enables the holder to sell common stock back to the firm at an agreed upon price,at a specified time in the future.
• B) Generally,warrants are distributed along with preferred stock in order to make the preferred stock less risky.
• C) If a company issuing coupon paying debt wanted to reduce the cash outflows associated with the coupon payments,it could issue warrants with the debt to accomplish this.
• D) One of the disadvantages of warrants to the issuing firm is that they can be detachable and can be traded separately from the debt with which they are issued.
• E) Warrants are attractive to investors because when they are issued with stock,investors receive dividends on the warrants they own as well as on the underlying stock.

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Definitions:

Series RL Circuit

An electrical circuit composed of resistors (R) and inductors (L) connected in a series configuration, affecting the phase and amplitude of the circuit's response.

Inductive Reactance

The resistance offered by an inductor to alternating current, which varies with the frequency of the current and the inductance, also measured in ohms.

Power Factor

A dimensionless number between 0 and 1 that represents the ratio of the real power flowing to the load to the apparent power in the circuit.

True Power

The portion of power, measured in watts (W), that performs real work in a circuit, as opposed to apparent power which also includes reactive power.