Options & derivatives
Warrant
A long-dated right to buy shares at a fixed price, issued by the company itself.
How it works
Warrants resemble call options but are issued by the company rather than written by another investor, and exercising one creates new shares.
They typically run for years rather than months, and are often attached to bond or equity issues as a sweetener.
Where it misleads people
Exercise dilutes existing shareholders, because the shares are newly created rather than transferred.
Related terms
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