Warrants
A warrant is a financial instrument that allows the owner to buy a set amount of equity in a company at a predefined price on a predetermined date.
What is a warrant?
A warrant is a security that gives the holder the right, but not the obligation, to buy a certain amount of shares at an agreed-upon price (known as the exercise price) in the future.
Is there a difference between warrants and options?
Warrants are usually issued by companies and provide holders with rights to purchase stock from the issuer. Options on publicly traded securities are typically available on exchanges and provide holders with the right to buy or sell a certain asset at an agreed-upon strike price from another investor. Options can also be granted by companies, typically to employees and provide the right to purchase shares at an agreed upon price.
How long do warrants last?
They can last anywhere from six months up to several decades depending on the terms set forth in their agreement.
How is the exercise price of a warrant determined?
The exercise price of a warrant is typically set by the issuing company either at or near its current market value.
Are there any taxes or fees associated with exercising a warrant?
In some cases, yes; however, this will depend on specific factors such as your jurisdiction’s tax laws and other factors that should be clarified before taking advantage of any warrants. It is important to speak with your financial advisor if you have any questions regarding tax implications.
