warrant investment & finance definition
A
security issued by a company that gives the owner the right to purchase stock
shares at a set price within a specific time frame. In contrast, a perpetual warrant has no expiration date.
Sometimes warrants are given to purchasers of debt or preferred stock as an
incentive to buy.
See warrant in Wall Street Words
A security that permits its owner to purchase a specific number of shares of stock at a predetermined price. For example, a warrant may give an investor the right to purchase 5 shares of XYZ common stock at a price of $25 per share until October 1, 2007. Warrants usually originate as part of a new bond issue, but they trade separately after issuance. Warrants usually have limited lives. Their values are considerably more volatile than the values of the underlying stock. Thus, investment in warrants is not for the timid. Also called
equity warrant,
stock warrant,
subscription warrant. See also
debt warrant,
perpetual warrant,
usable bond.
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