warrant business definition

A security that permits its owner to purchase a specific number of shares of stock at a predetermined price. For example, a warrant may give an investor the right to purchase five shares of XYZ common stock at a price of $25 per share until October 1, 2013. Warrants usually originate as part of a new bond issue, but they trade separately after issuance. Also called equity warrant, stock warrant, subscription warrant. See also debt warrant, perpetual warrant, usable bond.