When Warrants Are Exercised, What Happens as a Result of This

question 22

Multiple Choice

When warrants are exercised, what happens as a result of this?

• A) The security associated with the warrant drops in value depending on the exercise price of the warrant.
• B) Funds are transferred from the retained earnings account to common shares account for the market value of the shares.
• C) The number of common shares outstanding changes.
• D) There is no new capital for the firm because the warrants are exchanged for the common shares.

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Definitions:

Scientific Notation

A way of expressing numbers that are too big or too small to be conveniently written in decimal form, using powers of 10.

Position Function

A mathematical function that describes the position of an object as a function of time, often used in physics to study motion.

Initial Velocity

The speed of an object at the moment it begins its motion.

Positive Integers

Natural numbers greater than zero (1, 2, 3, ...).