Two major differences between a warrant and a call option are:
A)Warrants are contracts outside of the ﬁrm while options are within the ﬁrm.
B)Warrants have long maturities while options are usually short maturities.
C)Warrant exercise dilutes the value of equity while option exercise does not.
D)Both A and C.
E)Both B and C.

Question

Quizplus · Accepted Answer

Warrants often come with longer maturities compared to standard options, and when warrants are exercised, they result in the issuance of new shares by the company, which dilutes the existing shareholders' value. Options, on the other hand, are typically contracts on existing shares and do not affect the total number of shares outstanding when exercised.

Two Major Differences Between a Warrant and a Call Option