In finance, warrant is a name given to a security that entitles the holder to buy stock of the company that issued it at a specified price, usually this price is higher than the stock price at time of issue.
Frequently Warrants are attached as a sweetener to bonds or preferred stock, by which the issuer is allowed to pay lower interest rates or dividends. Also in order to enhance the yield of the bond they can be used, and they make bonds more attractive to potential buyers. Moreover warrants can also be used in private equity deals. Frequently, these warrants are detachable, and they can be sold independently of the bond or stock.
