SIE Exam Question 626: Answer and Explanation

Question: 626

Which of the following accurately describes the difference between rights and warrants?

(1) A warrant may be attached to new debt or preferred issues to make the issues more attractive to buyers.

(2) Rights and warrants have different lifespans.

(3) Warrants usually expire within a few weeks.

(4) Rights may continue without expiring for up to several years.

  • A. (1) only
  • B. (1) and (2) only
  • C. (2), (3), and (4) only
  • D. All of the above are correct.

Correct Answer: B

Explanation:

A warrant may be attached to new debt or preferred issues to make the issues more attractive to buyers. A difference between rights and warrants is their lifespan. Rights usually expire within a few weeks, and warrants may continue without expiring for up to several years.

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