What is a Warrant?

What is a Warrant?

In this discussion of warrants, James touches on the details of warrants and explains Siemens’ 2012 issuance.
Overview

A warrant in the equity-linked market is usually a call option. This is an instrument with a fixed maturity that offers the buyer the chance to pay a fixed price for shares at a premium to the existing share price.

Key learning objectives:

  • Define a warrant

  • Explain how a warrant is priced

  • Discuss how a bond plus warrant package can be traded separately and why it may be desirable.

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Summary
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