Series 7 Exam Prep 18, Rights, Warrants, and Dilution

This podcast is made by Ran Chen, who holds an EA license, Insurance and Securities licenses (Series 6, 63, 65), and the CFP® designation. He is passionate about opening access to high-quality exam preparation resources and helping learners prepare more effectively for professional certification exams. In this episode you will learn: - Preemptive rights give existing shareholders the ability to maintain their ownership percentage during a new share issuance. - The value of a right is calculated differently before (cum-rights, with a +1 in the denominator) and after (ex-rights) the ex-date. - Warrants are long-term instruments, often used as sweeteners, with an exercise price initially set above the current market price. - Exercising warrants causes dilution for all existing shareholders, while participating in a rights offering prevents dilution for that specific shareholder. - A common exam trap is confusing the short-term, discounted nature of rights with the long-term, premium-priced nature of warrants. For more free exam prep tools, practice questions, and AI-powered explanations, visit https://open-exam-prep.com/ or YouTube Channel: https://www.youtube.com/@Open-exam-prep