A warrant is a security similar to a stock option that grants the holder the right to purchase (call) or sell (put) a specified security at a fixed price, usually at a fixed date. It is equivalent to a stock option and is generally used by firms to make their debt issue more attractive or to raise capital. Warrants can be detached from the bond and traded separately on stock exchanges. Warrants differ from either convertible or exchangeable bonds in that they allow the holders to the common stock of a firm other than the issuer’s.

Editor: Bianca GIANNINI
© 2010 ASSONEB

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