For various reasons a corporation may issue warrants to purchase its ordinary shares at specified prices that, depending on the circumstances, may be less than, equal to, or greater than the current market price. For example, warrants may be issued:
1. To existing shareholders on a pro rata basis.
2. To certain key employees under an incentive share-option plan.
3. To purchasers of the corporation’s bonds.

Instructions
For each of the three examples of how share warrants are used:
(a) Explain why they are used.
(b) Discuss the significance of the price (or prices) at which the warrants are issued (or granted) in relation to (1) the current market price of the company’s shares, and (2) the length of time over which they can be exercised.
(c) Describe the information that should be disclosed in financial statements, or notes thereto, that are prepared when share warrants are outstanding in the hands of the three groups listed above.