The difference between a warrant and a traded call option. Warrant: Warrant is given to the security holder of those who purchase the shares. It is not the obligation of the shareholder but it is a right of the shareholder to purchase the share at a fixed price. Option: Option is the contract between two parties one is the buyer and the other is the seller. It gives the option to the buyer to purchase the share at a certain price at a fixed time.

Question

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Answer 1

Question

Chapter 24, Problem 1CQ

Summary Introduction

To explain: The difference between a warrant and a traded call option.

Warrant:

Warrant is given to the security holder of those who purchase the shares. It is not the obligation of the shareholder but it is a right of the shareholder to purchase the share at a fixed price.

Option:

Option is the contract between two parties one is the buyer and the other is the seller. It gives the option to the buyer to purchase the share at a certain price at a fixed time.

Expert Solution & Answer

Answer to Problem 1CQ

There is a little difference between the warrant and the call option.
A company issues warrant and when it is implemented it increases the number of shares.
Option is the contract between two parties’ the investor and the company which does not affect the number of shares.

Explanation of Solution

Whenever the company issues warrant it increases the number of share, which is good for the company’s goodwill.
Call option does not have an effect on the number of shares of a company.

Conclusion

Hence, it can be said that the difference between both of these is only the number of shares that gets affected.

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Answer 2

Question

Chapter 24, Problem 1CQ

Summary Introduction

To explain: The difference between a warrant and a traded call option.

Warrant:

Warrant is given to the security holder of those who purchase the shares. It is not the obligation of the shareholder but it is a right of the shareholder to purchase the share at a fixed price.

Option:

Option is the contract between two parties one is the buyer and the other is the seller. It gives the option to the buyer to purchase the share at a certain price at a fixed time.

Expert Solution & Answer

Answer to Problem 1CQ

There is a little difference between the warrant and the call option.
A company issues warrant and when it is implemented it increases the number of shares.
Option is the contract between two parties’ the investor and the company which does not affect the number of shares.

Explanation of Solution

Whenever the company issues warrant it increases the number of share, which is good for the company’s goodwill.
Call option does not have an effect on the number of shares of a company.

Conclusion

Hence, it can be said that the difference between both of these is only the number of shares that gets affected.

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Answer 3

Question

Chapter 24, Problem 1CQ

Summary Introduction

To explain: The difference between a warrant and a traded call option.

Warrant:

Warrant is given to the security holder of those who purchase the shares. It is not the obligation of the shareholder but it is a right of the shareholder to purchase the share at a fixed price.

Option:

Option is the contract between two parties one is the buyer and the other is the seller. It gives the option to the buyer to purchase the share at a certain price at a fixed time.

Expert Solution & Answer

Answer to Problem 1CQ

There is a little difference between the warrant and the call option.
A company issues warrant and when it is implemented it increases the number of shares.
Option is the contract between two parties’ the investor and the company which does not affect the number of shares.

Explanation of Solution

Whenever the company issues warrant it increases the number of share, which is good for the company’s goodwill.
Call option does not have an effect on the number of shares of a company.

Conclusion

Hence, it can be said that the difference between both of these is only the number of shares that gets affected.

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Answer 4

Question

Chapter 24, Problem 1CQ

Summary Introduction

To explain: The difference between a warrant and a traded call option.

Warrant:

Warrant is given to the security holder of those who purchase the shares. It is not the obligation of the shareholder but it is a right of the shareholder to purchase the share at a fixed price.

Option:

Option is the contract between two parties one is the buyer and the other is the seller. It gives the option to the buyer to purchase the share at a certain price at a fixed time.

Expert Solution & Answer

Answer to Problem 1CQ

There is a little difference between the warrant and the call option.
A company issues warrant and when it is implemented it increases the number of shares.
Option is the contract between two parties’ the investor and the company which does not affect the number of shares.

Explanation of Solution

Whenever the company issues warrant it increases the number of share, which is good for the company’s goodwill.
Call option does not have an effect on the number of shares of a company.

Conclusion

Hence, it can be said that the difference between both of these is only the number of shares that gets affected.

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Answer 5

Chapter 24, Problem 1CQ

Summary Introduction

To explain: The difference between a warrant and a traded call option.

Warrant:

Warrant is given to the security holder of those who purchase the shares. It is not the obligation of the shareholder but it is a right of the shareholder to purchase the share at a fixed price.

Option:

Option is the contract between two parties one is the buyer and the other is the seller. It gives the option to the buyer to purchase the share at a certain price at a fixed time.

Expert Solution & Answer

Answer to Problem 1CQ

There is a little difference between the warrant and the call option.
A company issues warrant and when it is implemented it increases the number of shares.
Option is the contract between two parties’ the investor and the company which does not affect the number of shares.

Explanation of Solution

Whenever the company issues warrant it increases the number of share, which is good for the company’s goodwill.
Call option does not have an effect on the number of shares of a company.

Conclusion

Hence, it can be said that the difference between both of these is only the number of shares that gets affected.

Answer 6

Chapter 24, Problem 1CQ

Summary Introduction

To explain: The difference between a warrant and a traded call option.

Warrant:

Warrant is given to the security holder of those who purchase the shares. It is not the obligation of the shareholder but it is a right of the shareholder to purchase the share at a fixed price.

Option:

Option is the contract between two parties one is the buyer and the other is the seller. It gives the option to the buyer to purchase the share at a certain price at a fixed time.

Expert Solution & Answer

Answer to Problem 1CQ

There is a little difference between the warrant and the call option.
A company issues warrant and when it is implemented it increases the number of shares.
Option is the contract between two parties’ the investor and the company which does not affect the number of shares.

Explanation of Solution

Whenever the company issues warrant it increases the number of share, which is good for the company’s goodwill.
Call option does not have an effect on the number of shares of a company.

Conclusion

Hence, it can be said that the difference between both of these is only the number of shares that gets affected.

Answer 7

Chapter 24, Problem 1CQ

Summary Introduction

To explain: The difference between a warrant and a traded call option.

Warrant:

Warrant is given to the security holder of those who purchase the shares. It is not the obligation of the shareholder but it is a right of the shareholder to purchase the share at a fixed price.

Option:

Option is the contract between two parties one is the buyer and the other is the seller. It gives the option to the buyer to purchase the share at a certain price at a fixed time.

Answer 8

Expert Solution & Answer

Answer to Problem 1CQ

There is a little difference between the warrant and the call option.
A company issues warrant and when it is implemented it increases the number of shares.
Option is the contract between two parties’ the investor and the company which does not affect the number of shares.

Answer 9

Expert Solution & Answer

Answer 10

Expert Solution & Answer

Answer 11

Explanation of Solution

Whenever the company issues warrant it increases the number of share, which is good for the company’s goodwill.
Call option does not have an effect on the number of shares of a company.

Answer 12

Conclusion

Hence, it can be said that the difference between both of these is only the number of shares that gets affected.

Answer 13

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Concept explainers

Answer to Problem 1CQ

Explanation of Solution

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Chapter 24 Solutions