In Comparison to Convertibles, the Exercise of a Warrant Shifts

question 148

True/False

In comparison to convertibles, the exercise of a warrant shifts the firm's capital structure to a less highly levered position.

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Definitions:

Dividend Payout Ratio

The fraction of net earnings a firm pays to its shareholders as dividends, usually expressed as a percentage.

Profit Margin

A measure of profitability calculated as net income divided by revenue.

Equity Financing

The method of raising capital through the sale of shares in a company, giving investors ownership interests.

Current Liabilities

Obligations or debts a company expects to settle within one fiscal year or its operating cycle, whichever is longer.