stock purchase warrant

A stock purchase warrant is a certificate that allows its holder to buy a company's stock at a set price within a specific timeframe. Unlike stock options, which are traded between investors, warrants are typically issued directly by the company.12

Warrants are often attached to other securities, like bonds or preferred stock, to make them more attractive to investors. They can also be issued to underwriters or promoters as incentives. When a warrant is exercised, the company receives additional funds, and the existing debt or preferred stock remains. Warrants are particularly popular when stock prices are expected to rise.132