Warrants are often referred to as "sweeteners" to a bond issue, as though the firm can "throw them into the deal" at no cost. Explain why it is, or is not, costless for the firm to include warrants with a bond issue.

multiple choice are:

warrants are costly, but the firm gets paid for their cost when they issue (sell) the bond

warrants are costless to the firm because the firm simply issues more shares, which is just a "paper" cost

warrants are costly to the firm because the additional shares dilute the value of existing shareholders' shares

warrants are costless to the firm because they are part of the bond

A and B

A and C

A and D

B and C

B and D

C and D

all but A

all but B

all but C

all but D

all are true