Answer to Question #126963 in Finance for ELIZABETH RIMUI

Question

a) Distinguish between warrants and convertible securities

Answer 1

A warrant is a long term option to buy a specific number of common stock at particular stated price during specified period of time.

Convertible securities are securities or investment (convertible bonds or preferred stocks ) which can be converted into a different form like shares of an entity’s common stock. Convertible securities are generally issued by entities purposely to raise money. In most cases, the entities have all the rights of determining when the conversion should takes place.