When warrants are exercised,
A) only the number of common shares outstanding increases.
B) debt is reduced.
C) debt is reduced while common equity increases.
D) there is no effect on the firm's capital structure.

Question

Quizplus · Accepted Answer

When warrants are exercised, the holder buys shares at a predetermined price, increasing the number of common shares outstanding. There is no direct impact on debt or the firm's capital structure.

When Warrants Are Exercised