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.
In some financial markets such as Deutsche Börse and Hong Kong warrants are actively traded . In Hong Kong Stock Exchange, in the first quarter of 2009 warrants accounted for 11.7% of the turnover, just second to the callable bull/bear contracts.
Secondary Market
Sometimes the issuer make efforts to establish a market for the warrant and he try to register it with a listed exchange. If this is the case, then the price can be obtained from a broker. But usually, warrants are privately held or not registered, and with that their prices become less obvious.
It is easy to track warrants, you can do this by just adding a "w" after the company’s ticker symbol in order to check the warrant’s price. Still unregistered warrant transactions can be facilitated between accredited parties, and in fact, in order to provide liquidity for these investments several secondary markets have been formed.
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Posted by R. MAK. in Currency Rates, Currency Trade, Forex Basics, Forex Facts, Forex Market, Forex trading, Trading · 0 Comment
