When warrants are exercised, the company goes through an accounting process to d

Question

When warrants are exercised, the company goes through an accounting process to determine the new number of shares created. This process assumes that the company Select one: A. Creates one new share for every warrant exercised B. Reduces the number of shares created by the amount of shares that can be bought in the market with the proceeds of the cash generated by the exercise of the warrants C. Creates one new share in the ratio of the exercise price and the current stock price D. None of the above

Explanation / Answer

Answer is A). Creates one new share for every warrant exercised

In case a warrant is exercised, company issues a share to the warrant holder on the receipt of the exercise price mentioned in the warrant.

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