Explain the advantages and risks associated with Equity warrants?
Submitted by: AdministratorThe advantages of equity warrants are as follows:-
1. Through this warrant a holder can buy and sell the securities and shares in the market.
2. Prices of these warrants are low so the leverage and the gearing which it provides is high.
3. Due to these prices there are larger capital gains and losses.
4. These warrants can offer gains and protection in the market.
The risks of it are as follows:-
1) The high price of leverage and gearing of warrants is not good for investors as they have to take more losses then gains as the percentage of loss of the warrant increases.
2) The risk which is involved with the value of the certificate which will be provided is that the certificate value can drop to zero due to which the warrant may loose the redemption value.
3) Holder can't have the opinion in voting, shareholding and dividend rights. So, the holder becomes isolated in overall functioning of the company but the holder is affected by the decisions which will be made by the company.
Submitted by: Administrator
1. Through this warrant a holder can buy and sell the securities and shares in the market.
2. Prices of these warrants are low so the leverage and the gearing which it provides is high.
3. Due to these prices there are larger capital gains and losses.
4. These warrants can offer gains and protection in the market.
The risks of it are as follows:-
1) The high price of leverage and gearing of warrants is not good for investors as they have to take more losses then gains as the percentage of loss of the warrant increases.
2) The risk which is involved with the value of the certificate which will be provided is that the certificate value can drop to zero due to which the warrant may loose the redemption value.
3) Holder can't have the opinion in voting, shareholding and dividend rights. So, the holder becomes isolated in overall functioning of the company but the holder is affected by the decisions which will be made by the company.
Submitted by: Administrator
Read Online Capital Market Job Interview Questions And Answers
Top Capital Market Questions
☺ | Can a company make public issue of equity shares if partly paid shares are not fully paid up? |
☺ | What "rights issue" do the shareholders of a company have under Companies Act, 1956? |
☺ | What is Zero coupon bonds? |
☺ | Explain Profitability Index (PI) /Benefit Cost Ratio (B/C Ratio)? |
☺ | What does capital market mean? How does the company raise funds in capital market? |
Top Finance and Accounts Categories
☺ | MBA Finance Interview Questions. |
☺ | Bank Teller Interview Questions. |
☺ | Capital Market Interview Questions. |
☺ | Cashier Interview Questions. |
☺ | Bank Reconciliation Interview Questions. |