CFA CFA Level 1 warrants

warrants

  • This topic has 2 replies, 2 voices, and was last updated Apr-17 by tronik.
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    • tronik
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      Why is this true: “An increase in average market price could cause Zachary’s warrants to go from antidilutive to dilutive. If the average price of the stock increases during the year, the warrants are likely to be exercised at some point during the year. ” I thought warrants would more likely be exercised if the stock price at year-end rose.

      Thanks

    • Sophie Macon
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      Hi @tronik, welcome!

      It’s because warrant can be exercised anytime within a specified period, it doesn’t need to be at maturity like some plain vanilla call options.

    • tronik
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      hmm, options can be exercised anytime within a specified period too, called “vesting.” i guess since the vesting period can be anytime during the year for options or warrants (not just year end), then “during the year” answer is better than “end of year” answer.

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