Stock Options, Rights, and Warrants Are Different from Convertible Securities

question 210

Multiple Choice

Stock options, rights, and warrants are different from convertible securities in that they:

• A) Typically increase cash upon exercise.
• B) Usually reduce total assets upon exercise.
• C) Often reduce liabilities upon exercise.
• D) Normally increase retained earnings upon exercise.

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Definitions:

Asset Revaluation

The upward or downward adjustment of the book value of an asset to properly reflect its current market value.

Profits

The financial gain obtained when revenues generated from business activities exceed the expenses and costs associated with those activities.

Investor

An individual or entity that commits capital with the expectation of receiving financial returns, often through the purchase of stocks, bonds, or other investment vehicles.

Deferred Tax Liability

A tax obligation that a company owes but has not yet paid, arising from temporary differences between accounting and tax treatments of income and expenses.