SIE practice questionmediumWarrants
How do warrants differ from stock rights?
- AWarrants are exercised at a price below the current market price
- BWarrants can only be issued by the government
- CWarrants have shorter expiration periods than rights
- DWarrants have longer expiration periods and are exercised at a price above the current market price at issuance✓ Correct answer
Explanation
Why D — Warrants have longer expiration periods and are exercised at a price above the current market price at issuance
Warrants are long-term instruments (often 2-10 years or even perpetual) with exercise prices set ABOVE the market price at the time of issuance. Rights are short-term (30-90 days) with exercise prices BELOW market. Both are issued by the corporation, not the government.
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