Warrant

A security entitling the holder to buy a proportionate amount of stock at some specified future date at a specified price, usually one higher than current market. This " warrant" is then traded as a security, the price of which reflects the value of the underlying stock. Warrants are issued by corporations and often used as a " sweetener" bundled with another class of security to enhance the marketability of the latter. Warrants are like call options, but with much longer time spans — sometimes years. In addition, warrants are offered by corporations whereas exchange traded call options are not issued by firms. The New York Times Financial Glossary

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▪ I. warrant war‧rant ¹ [ˈwɒrənt ǁ ˈwɔː-, ˈwɑː-] noun [countable]

1. also share warrant, stock warrant FINANCE an official document giving someone, usually an existing shareholder, the right to buy shares in a company. Warrants are similar to rights issue S, except that holders usually have longer to use them:

• The warrant entitles the company to buy 300,000 common shares for $18.50 each.

• Each £5,000 bond carries one stock warrant exercisable five years from now.

ˈbond ˌwarrant FINANCE

the right to buy particular bonds in the future at a particular price

ˈcovered ˌwarrant FINANCE

a warrant that is owned by a person selling the related shares and who is able to sell them without having to first buy the shares elsewhere

ˈdividend ˌwarrant FINANCE

a cheque sent by a company to a shareholder in payment of dividends; = dividend check AmE

2. LAW an official document giving someone the legal authority to do something:

• The attorney's office filed a warrant seeking the forfeiture of the illegal assets.

• According to the arrest warrant, one of his victims was a widow with nine children.

  [m0] ▪ II. warrant warrant ² verb [transitive]

to promise that something is true or to guarantee that something will happen:

• Investors expect the auditors to warrant information contained in the accountants' report.

• If the purchaser wishes specific matters to be warranted, these should be set out in detail in the contract.

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   A type of financial instrument attached to a security that has a separate life and value. A warrant allows the investor to purchase ordinary shares at a fixed price over a period of time (years) or to perpetuity. The price of the shares is usually higher than the market price at the time of issue. A warrant is freely transferable and can be traded separately. Warrants are usually issued by companies for their own shares, or the shares of a subsidary. Covered warrants are issued by banks, for the shares of other companies, or for use as a trading instrument.

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Ⅰ.

warrant UK US /ˈwɒr^ənt/ noun [C]

► FINANCE the right to buy a company's shares at a particular price by a particular date: »

The company has the right to exercise warrants for the stock, up to a maximum of 5% of the total shares outstanding.

► LAW a legal document that gives someone, for example, the police, the authority to do something: »

an arrest warrant

→ See also BOND WARRANT(Cf. ↑bond warrant), COVERED WARRANT(Cf. ↑covered warrant), DIVIDEND WARRANT(Cf. ↑dividend warrant), SHARE WARRANT(Cf. ↑share warrant), STOCK WARRANT(Cf. ↑stock warrant), WAREHOUSE WARRANT(Cf. ↑warehouse warrant)

Ⅱ.

warrant UK US /ˈwɒr^ənt/ verb [T]

► to promise that something is true, or say that it is certain that something will happen: »

Our products are warranted against defects in materials and workmanship.