How are warrants used in corporate financing?

How are warrants used in corporate financing?

Category:
June 7, 2021
4 Views
0
0

How are warrants used in corporate financing?

Answer and ExplanationSolution by a verified expert

Explanation

Corporations with high uncertainty in their future have higher risks. Investors will require higher returns/interest from a bond issued from these corporations. If the corporation cannot afford such a high interest rate from bond issuance, warrants may be issued along with the bonds to lower the interest rate. The warrants will attract investors to buy the bonds by providing the possibility of equity appreciation in addition to the coupon interest payments.

Sample Response

Corporations issue warrants as part of their fundraising activities to lower the nominal interest on the bonds and invite more investors to buy the securities they will issue along with the warrants.

Purchase this answer to view it.
Click the button to login/signup and buy full solution at 2 USD only.

The Best Research Paper Writing Service

Would you want to pay someone to write your paper professionally from scratch? 100% Original and 0% AI Content!.

🎓 Write my Essay
📚 Write my Persuasive Essay
📋 Humanize AI Content for Turnitin
💻 Write my Reflective Essay
📑 Write my Research Paper
📜 Write my Thesis Paper
📘 Write my Dissertation
📋 Write my Case Study
📝 Write my Online Exam
✒️ Write my Term Paper
Write my Paper