Which One of the Following Is a Correct Statement

question 7

Multiple Choice

Which one of the following is a correct statement?

• A) Exercise of warrants results in more outstanding shares of stock, while exercise of listed call options does not.
• B) A convertible bond consists of a straight bond plus a specified number of detachable warrants.
• C) Call options always have an initial maturity greater than 1 year, while warrants have an initial maturity less than 1 year.
• D) Call options may be convertible into the stock, while warrants are not convertible into the stock.

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Definitions:

Cash Dividends

Distributions of profits from a corporation to its shareholders as payments.

Selling and Administrative Expenses

Indirect costs not directly tied to product production, including marketing, management, rent, and utilities.

Significance Level

A threshold in statistical hypothesis testing that determines the probability of rejecting the null hypothesis when it is actually true.

Test Statistic

A type of statistic used in hypothesis testing, calculated from sample data, to determine the p-value or test the null hypothesis.