Which of the Following Would Not Describe the Difference Between

question 36

Multiple Choice

Which of the following would not describe the difference between warrants and call options?

• A)Warrants are issued by firms whereas call options are issued by individuals.
• B)Call options have an exercise price whereas warrants do not.
• C)Exercising of warrants creates dilution whereas exercising call options does not.
• D)When call options are exercised existing shares trade hands whereas if warrants are exercised new stock must be issued.
• E)None of the above.

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Definitions:

Interest Expense

The cost incurred by an entity for borrowed funds, which is reported on the income statement.

Pre-Acquisition Dividend

Dividends declared by a subsidiary prior to being acquired or controlled by the parent company.

Final Dividend

The last dividend payment made by a company to its shareholders for a fiscal year, after the company's final annual earnings are known.

Tax-Effect Adjustment

Adjustments made to account for the tax implications of differences between accounting and tax treatments of items, ensuring financial statements reflect future tax liabilities or assets.