Final answer:
The statement that a warrant holder receives cash dividends on the underlying stock is false. Warrant holders have the right to purchase stock at a set price before the warrant expires, but they only gain shareholder rights, like voting and dividends, after they exercise the warrants and become actual shareholders.
Step-by-step explanation:
The statement that a warrant holder is not entitled to vote but does receive any cash dividends paid on the underlying stock is false. Warrants provide the holder the right to purchase a company's stock at a specific price and at a specific date. While a warrant is similar to an option, it does not confer any voting rights or entitlement to dividends to its holder. The main rights of a warrant holder are the ability to buy the underlying stock at a predetermined price (known as the exercise or strike price) before the expiration of the warrant.If a warrant holder exercises their warrants and purchases the stock, they then become a shareholder of the company. As a shareholder, they obtain the rights associated with share ownership, which typically includes voting rights and the right to receive dividends. However, prior to exercising the warrants, they are not entitled to any dividends that may be paid to shareholders.