The Exercise of Warrants Creates New Shares Which

question 51

Multiple Choice

The exercise of warrants creates new shares which:

• A)increases the total number of shares but does not affect share value.
• B)increases the total number of shares which can reduce an individual share value.
• C)does not change the number of shares outstanding, similar to options.
• D)increases share value because cash is paid into the firm at the time of warrant exercise.
• E)None of the above.

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Definitions:

Issuing Stock

This refers to the process by which a company sells new shares to investors in order to raise capital.

Accounting Science

The discipline that studies the concepts, rules, and processes followed in accounting to collect, analyze, verify, and report financial information.

Financial Fraud

Intentional acts of deception involving financial transactions for the purpose of personal gain, such as embezzlement, insider trading, and fraudulent financial reporting.

Financial Statements

Compiled documents that present an entity's financial activity and condition, including the balance sheet, income statement, and cash flow statement.