A. By including warrants with the bonds that are issued the company is able to reduce the cost of the debt. This is because the purchaser of the bond is receiving two items of value - the bond and the warrants. Therefore, the interest rate can be a little bit lower and the buyer will still purchase the bonds because of the warrant that is attached to it.
B. The issuing of warrants has no immediate impact on managerial control of the company, but if the warrants are exercised, this will decrease managerial control over the company.
C. The issuance of warrants does not effect Basic EPS, but it will cause Diluted EPS to be reduced.
D. The issuance of warrants does not impact whether or not the bonds may be bought-back before their maturity. This is determined by whether the bonds are callable or not.
