The similarities of a right and a warrant include all of the following EXCEPT
A) they both give the holder an option to acquire a certain number of shares of common stock at a specified price.
B) they both result in new equity capital for the firm.
C) they are both issued with exercise or subscription prices below the prevailing market price of stock.
D) they both may be traded independently from the security to which they were attached.

Question

Quizplus · Accepted Answer

Rights are typically issued with exercise prices below the market price to encourage shareholders to purchase more shares, while warrants often have exercise prices above the market price as they are long-term instruments.

The Similarities of a Right and a Warrant Include All