Question

At issuance Warrant price than market price and at exercise are than market price

A) Higher, Lower.
B) Lower, Higher.
C) Equal, Equal.
D) Lower, Equal.

Answer 1

Warrants are priced higher than the market price at issuance and lower than the market price at exercise.

Step-by-step explanation:

In the context of warrants, the warrant price at issuance is generally higher than the market price. This is because the warrant represents the right to buy a stock at a certain price in the future, and investors are willing to pay a premium for this right. On the other hand, the warrant price at exercise refers to the price at which the warrant holder can buy the underlying stock. This price is typically lower than the market price because the warrant holder has already paid a premium for the right to buy the stock.