Final answer:
Warrants are indeed attached to bond issues to make them more attractive to investors, providing an option to purchase the company's stock at a set price, adding extra profit potential to an investment in bonds.
Step-by-step explanation:
The statement 'Warrants are options, often attached to bond issues, to make the bonds more attractive to investors' is true. Warrants are indeed options that can be attached to bonds, giving bondholders the right, but not the obligation, to purchase shares of the company at a predetermined price before the warrant expires. By attaching warrants to bond issues, companies make their bonds more attractive because they can potentially offer additional profit from the conversion of warrants into shares if the company's stock price increases.
Bonds themselves are debt securities under which the issuer owes holders a debt and, depending on the terms, is obligated to pay interest (the coupon) and repay the principal at a later date (maturity date). Bonds are used by companies to raise money directly from investors, which is an alternative to bank loans. Since issuing bonds requires persuading a swath of investors rather than a singular bank, it can be a preferable option when a company wishes to harness capital from a broader market.