Convertibles and warrants areoffered by companies to attract and raise finance.
Convertibles are long-term securities which can be changed into another type of A security is a financial instrument, such as stocks and sh... More, such as common . Convertibles include and preferred , but most commonly take the form of Bonds are debt instruments, which means they are a way of b... More.
Convertibles are attractive to What are value stocks? A value company is a company that app... More who are looking for an with greater growth potential than that offered by a traditional bond. By purchasing a convertible bond, the An investor is someone who spends capital with the expectat... More can still receive returns as if it were a traditional bond, but has the additional option of converting that bond into What are value stocks? A value company is a company that app... More if the share increases enough to make it worthwhile.
Warrants are also long-term securities but are generally shorter-term than convertibles. They grant What are value stocks? A value company is a company that app... More the right to purchase shares at a fixed What are value stocks? A value company is a company that app... More (known as the “exercise price”) for a predetermined amount of time, often several years.
Warrants are often tied to bonds or preferred stock, but can also be issued independently.
The exercise What is price? The price is the measure of the value of good... More is usually higher than the price at which the shares for the company are currently trading, but if those shares then increase in value, the investor will still be able to purchase at the exercise price.
Warrants are more valuable in volatile markets when chances of the price swinging above the exercise price are good. They become less valuable as the warrant expiration date approaches because the chances of a favourable price swing are greatly reduced.