Warrants

 A warrant is a financial instrument that gives the holder the right, but not the obligation, to buy a specific number of shares of a company's stock at a predetermined price, known as the exercise price, at or before a specified expiration date.

Warrants are often issued as a component of a new bond or preferred stock issuance, and they can also be traded separately on the open market. They are typically valid for several years and have a specified exercise price, which is usually higher than the current market price of the underlying stock at the time of issuance.

Warrants can be beneficial for both the issuer and the holder. For the issuer, warrants can help to make their bonds or preferred stock more attractive to investors by offering additional value in the form of the right to purchase the company's common stock at a set price. For the holder, warrants can provide an opportunity for potential profit if the price of the underlying stock rises above the exercise price.

Warrants are a type of derivative security, meaning their value is derived from the underlying asset, in this case, the company's common stock. However, warrants are different from options, which are traded on an exchange and have standardized terms. Warrants are typically issued by the company directly and have unique terms and conditions specified in the warrant agreement.