Warrant

A type of Equity.

A long-term stock option issued by a company; allowing the holder to buy common shares at a fixed price, exercisable over a specific period in time.

It is a derivative that gives the holder the right (not obligation) to buy shares at a fixed price (called the exercise price) before a certain date.

Often issued alongside bonds or preferred shares to make the deal more attractive.

Why it’s used: If the stock price rises above the exercise price, the warrant becomes valuable. If not, it expires worthless.

Difference from options: Warrants are typically issued by the company itself, while options are traded on exchanges.