How Will Stockholders' Equity and Net Income Be Affected by the Issuance

Multiple Choice

How will stockholders' equity and net income be affected by the issuance of stock warrants to employees under a noncompensatory stock option plan? $\begin{array}{lll}& \text {Stockholders Equity}& \text {Net Income}\\\text { I. } & \text { no effect } & \text { no effect } \\\text { II. } & \text { no effect } & \text { decreased } \\\text { III. } & \text { decreased } & \text { decreased }\\\text { IV. } & \text { decreased } & \text { no effect } \end{array}$

A) I
B) II
C) III
D) IV