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SIE: Equity Securities
SIE practice questionmediumWarrants

A warrant issued with a new stock offering:

  1. AIs only valid for one year
  2. BGuarantees the holder a fixed dividend
  3. CAllows the purchase of company stock at a specified price in the future✓ Correct answer
  4. DIs the same as a stock right
Explanation

Why CAllows the purchase of company stock at a specified price in the future

A warrant allows investors to buy stock at a set price, typically above market, for several years. It does not guarantee dividends, is usually longer than a year, and is not the same as a right.

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