Equilibrium Exercise of European Warrants Nikunj Kapadia 1 Gregory Willette Original Version: March 2002 Current Version: October 2005 1 Isenberg School of Management, University of Massachusetts. The paper has beneļ¬ted from com- ments of N. Chidambaran, Hossein Kazemi, George Martin, Sanjay Nawalkha, N. R. Prabhala, Raghu Sundaram, seminar participants at Georgetown University, University of Maryland, and the Univer- sity of Virgina. I thank Xiaoling Pu for computational assistance. The paper includes results that were previously circulated in a paper titled Dilution and the Valuation of Options and Non-Identical Warrants. Please address correspondence to Nikunj Kapadia, Isenberg School of Management, 121 Presidents Drive, University of Massachusetts, Amherst, MA 01003, 413-545-5643, or email: nkapa- dia@som.umass.edu.