Two Major Differences Between a Warrant and a Call Option

question 21

Multiple Choice

Two major differences between a warrant and a call option are that

• A)warrants have long maturities while options are usually short maturities, and warrant exercise dilutes the value of equity while options exercise usually does not.
• B)warrants are contracts outside of the firm while options are within the firm.
• C)warrants have long maturities while options are usually short maturities.
• D)warrant exercise dilutes the value of equity while options exercise usually does not.

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Definitions:

Manufacturing Overhead

All indirect costs associated with manufacturing, such as utilities, rent of the production facility, and maintenance.

Departmental Predetermined

A rate or value established in advance for departments within a business, often used for budgeting, costing, or allocation purposes.

Casting Department

A department within a manufacturing entity responsible for the process of pouring liquid material into a mold to create a solid shape.

Overhead Rate

The ratio used to allocate indirect costs to produced goods, calculated by dividing total overheads by an allocation base.