Series 7 - General Securities Representative Exam

Training Mode

Unit 1 Unit 2 Unit 3 Unit 4

HGH corporation had an IPO recently and also issued warrants to early investors in the Pre IPO offering. One of your clients has 100 shares of the stock and 100 warrants. The warrants are exercisable for 1 common stock share at an exercise price of $17.50 if the stock is trading above 20. The stock is currently trading at $20.20 and the warrants are trading at $4.40 on the open market. What would you suggest to your client if he wants to get out of his HGH position?

Exercise the warrants and then sell all shares

A

Exercise the warrants but keep the shares

B

Sell the warrants on the open market and sell the shares

C

Sell the shares but keep the warrants

D