SIE - Securities Industry Essentials Exam
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During an IPO, an issuer offers the original investors the privilege to obtain more shares at a fixed price, at $10 higher than the current market price, with a 2 year expiration. The issuer is offering:
Options
A
Rights
B
Warrants
C
Futures
D
Explanations
These securities are known as warrants. Options are contracts between 2 parties (not the issuer). Futures are not securities. Rights are close to warrants; but they expire within a few weeks and are usually issued at a price LOWER than the current market price.