Rights vs. Warrants Comparison

What this video covers

• Why rights are short-term (30-90 days) and start in the money (subscription price below market), while warrants are long-term (2-5+ years, sometimes perpetual) and start out of the money (exercise price above market)
• How rights protect existing shareholders from dilution and are therefore anti-dilutive for current holders, backed by the corporate charter
• How warrants function as a sweetener attached to bonds or preferred stock to attract new purchasers, and why they are dilutive to existing shareholders
• Why neither rights nor warrants confer voting rights, dividends, or stockholder status until exercised, despite both being transferable on the secondary market
• The exact exam word-pair traps: short expiration plus below market equals rights; attached to a bond plus above market equals warrants
• What both instruments share in common: fixed exercise price, transferability, creation of new shares upon exercise, and absence of ownership rights pre-exercise
• How to apply the memory aids R equals Retain ownership and W equals sWeetener to eliminate confusion under exam pressure