Which of the following statements is most CORRECT with respect to the similariti

Question

Which of the following statements is most CORRECT with respect to the similarities and differences between warrants and convertibles?

Warrants have an option feature but convertibles do not.

Convertibles bring in additional funds when they are converted, but exercising warrants does not bring in any additional funds.

Both warrants and convertibles can be detached and traded separately from the debt. Debts disappear after convertibles are exercise, while debts still remains outstanding after warrants are exercised.

Both convertibles and warrants typically expire at the same time as their accompanying debts mature. while debts still remains outstanding after warrants are exercised.

Explanation / Answer

Both warrants and convertibles can be detached and traded separately from the debt. Debts disappear after convertibles are exercise, while debts still remains outstanding after warrants are exercised.

Warrants are potentially dilutive as are convertible securities, and when stock warrants are attached to debt, the debt remains after the warrants are exercised.

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