Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Concept explainers
Question
(2) When would you expect the warrants to be
exercised? What is a stepped-up exercise price?
Expert Solution
Step 1
Warrants are long term call option. Warrants generally bring new capital & have short maturities. Warrants are considered as security that entitles the holder to purchase the issuing company stock at the exercise price until the expiry date. Warrants always help the holder with special rights in order to purchase the securities.
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