Warrants are typically what in terms of duration?

• A. Long-term instrument.
• B. Short-term instrument.
• C. Perpetual with no expiration date.
• D. Never traded in secondary markets.

Answer: (A)

Warrants are long-duration instruments. They are issued with an expiration date that is typically several years in the future, often ranging from a couple to several years out. This extended time horizon reflects their role as equity derivatives tied to the issuer’s stock, where the potential for the stock price to exceed the exercise price may unfold over years. They are not perpetual—there is a finite expiration—and they are actively traded in secondary markets, so statements about never being traded or having no expiration don’t fit. The longer horizon distinguishes warrants from many other short-term instruments like standard options.