What is a ‘Call Warrant’
A call warrant is a financial instrument that gives the holder the right to buy the underlying share at a specific price, on or before a specified date. Call warrants are often included in a new equity or debt offering from a company, in order to provide an added inducement to potential investors. Call warrants are usually detachable from the accompanying stock or bond certificate and trade separately on major stock exchanges.
Explaining ‘Call Warrant’
The price at which the warrant holder can buy the underlying stock is called the exercise price or strike price. This strike price is often set “out-of-the-money,” i.e., it is fixed at a certain percentage above the current trading price of the underlying stock.
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