A warrant, in its general sense, is a security that entitles the holder to purchase or sell a specific number of shares from a company at a particular price, the so-called exercise price, within a certain term according to the terms of the issue. Warrants are often attached to bonds or stocks as sweeteners, issued by companies when they make a new issue of shares, in order to attract potential buyers. As they comprise only a fraction of the price of the share itself, investors may potentially benefit from the growth of a much larger shareholding.
April 30 2009