Warrants differ from listed options in that ________.
I.exercise of warrants results in dilution of a firm's earnings per share
II.when warrants are exercised new shares of stock must be created
III.warrant exercise result in cash flows to the firm whereas exercise of listed options does not
A) I only
B) I and II only
C) II and III only
D) I, II and III

Question

Quizplus · Accepted Answer

Warrants, when exercised, lead to the issuance of new shares, causing dilution of earnings per share (I and II). Additionally, the exercise of warrants results in cash flows to the firm because the holder pays the exercise price to the firm, unlike listed options where the transaction is between two investors (III).

Warrants Differ from Listed Options in That ________