Which One of the Following Conditions for an Equity Warrant

question 62

Multiple Choice

Which one of the following conditions for an equity warrant that is generally attached to a bond issue is NOT correct?

• A) The holder has a conditional option to convert into ordinary shares of a company.
• B) A warrant holder receives dividend payments over the life of the warrant.
• C) Warrants may be detachable and traded separately from the bond issue.
• D) The cost of borrowing through a bond issue may be lower with a warrant attached.

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Definitions:

Net Income

Net income refers to the total profit of a company after all expenses, taxes, and deductions have been subtracted from total revenue.

Owned Subsidiary

A company whose majority of shares or voting rights are held by another company, making it a controlling entity.

Equity Method

The equity method is an accounting technique used by firms to assess the profits earned by their investments in other companies by reporting these profits in proportion to their ownership.

Net Income

The total profit of a company after all expenses, taxes, and costs have been deducted from total revenue. It indicates the company's financial performance over a specified period.