CFA Practice Question

There are 206 practice questions for this study session.

CFA Practice Question

Which of the following statements regarding a warrant is FALSE?

A. Most warrants can be exercised anytime within their specified lives, which typically runs between 5 and 10 years.
B. A warrant is a call option to buy shares of stock.
C. A warrant does not represent ownership in the company.
D. A warrant is issued by an investor expecting the price of the underlying stock to rise.
Correct Answer: D

Warrants are issued by corporations, not investors. They are a type of call option that will allow the holder to profit if the underlying stock price rises.

User Contributed Comments 4

User Comment
To-be-CFA Warrants are issued by the corporations.
GBolt93 Would a corporation also not want to issue a warrant if it expected the underlying stock price to rise?
Rm178234 A is also false. Stock needs to be above the warrant exercise price in order to be exercised.
Haoran @Rm178234: they don't have to be above exercise price to be executed. The owner will not make money though.
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