Two Major Differences Between a Warrant and a Call Option

question 14

Multiple Choice

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

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

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Definitions:

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An opinion-based statement that reflects beliefs about what is good or desirable and prescribes or recommends specific policies.

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An objective statement that can be tested, amended, or rejected by referring to the available evidence.