Warrants

ABC corp. has a market price of $15 and a Price/Earnings multiple of 10. What was the corporation's Earnings Per Common Share? a. $.67 b. $1.50 c. $10 d. This cannot be determined

b. $1.50.

The exercise price of a warrant is set at issuance at: a. a discount to the market price of the common stock b. a premium to the market price of the common stock c. the market price of the common stock d. any price designated by the issuer

b. a premium to the market price of the common stock.

American Depository Receipts pay dividends in: I. US Dollars II. Eurodollars III. European Currency Units IV. Foreign Currency a. I only b. I and II c. III and IV d. I, II, III, IV

a. I only.

ADRs are used to: a. facilitate trading of domestic securities in foreign countries b. facilitate trading of foreign securities in the United States c. allow trading of rights on exchanges d. allow trading of warrants on exchanges

b. facilitate trading of foreign securities in the United States.

Which statement is TRUE about the time value and intrinsic value of rights and warrants when issued? a. both have time value and intrinsic value at issuance b. warrants have time value and rights have intrinsic value at issuance c. warrants have intrinsic value and rights have time value at issuance d. neither has time value or intrinsic value at issuance

b. warrants have time value and rights have intrinsic value at issuance.

A corporation is offering a new issue consisting of 100,000 units at $200 each. Each unit consists of 2 shares of preferred stock and a warrant to buy one half additional common share. A full warrant allows the purchase of an additional common share at $5. If all the warrants are exercised, the corporation will have outstanding: a. 100,000 preferred shares and 100,000 common shares b. 200,000 preferred shares and 100,000 common shares c. 200,000 preferred shares and 50,000 common shares d. 50,000 preferred shares and 100,000 common shares

c. 200,000 preferred shares and 50,000 common shares.

All of the following statements are true about ADRs EXCEPT: a. ADRs trade on national stock exchanges b. ADR holders receive dividends c. ADR holders can vote for the Board of Directors d. ADR holders receive the cash value of pre-emptive rights

c. ADR holders can vote for the Board of Directors.

Which of the following sources could be consulted to find the symbol of an NYSE listed security? I. Federal register II. NYSE web site III. Standard and Poor's Stock Guide a. I only b. I and II c. II and III d. I, II, III

c. II and III.

Which statements are TRUE regarding ADRs? I. ADRs are vehicles for trading United States securities in foreign countries II. ADRs are vehicles for trading foreign securities in the United States III. ADR market prices are influenced by foreign currency exchange fluctuations IV. ADR market prices are not influenced by foreign currency exchange fluctuations a. I and III b. I and IV c. II and III d. II and IV

c. II and III.

All of the following statements about warrants are true EXCEPT: a. warrants have a longer term than rights b. warrants are issued to make corporate senior securities offerings more attractive to investors c. warrants give the holder a perpetual interest in the issuer's underlying common stock d. warrants trade separately from the stock of the company

c. warrants give the holder a perpetual interest in the issuer's underlying common stock.