Type of options that permit bond holder to buy stocks at stated price are classified as______?
Correct answer: C. Warrants
- A. Provision
- B. Guarantee
- C. Warrants
- D. Convertibles
Explanation
Warrants give bondholders the right to purchase the issuer’s stock at a stated exercise price. Convertible bonds allow conversion of the bond into shares, which is a different feature.
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Business finance explains how organisations plan, obtain and use money while balancing risk, return and liquidity. Topics include financial statements, time value of money, budgeting, working capital, capital structure, sources of finance, investment appraisal and cost of capital. Capital budgeting evaluates long-term projects, whereas working capital manages day-to-day operations.
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