Warrants

Warrants are issued by corporations to raise money.† Stock warrants are issued often at the same time as corporations issue shares.† When an investor exercises their stock warrant the shares received for the investor are received from the company itself.† The company will issue new shares of the corporation.

Stock warrants are somewhat similar to stock options as they provide the investors the right to purchase the corporationís stock at a set price and at a specific date.† A call option, however provides the investor the obligation to purchase the corporationís stock at a set price, a set quantity and at a future date.† Call obligations are an obligation to purchase the stock.†

Corporations issuing warrants often include them in a new issue share offering.† This is done as a way to encourage investors to purchase in the new issue stock.†

Call warrants provide investors with the ability to purchase a specific number of shares from the corporation at a specific price on or before a certain expiry date.† Put warrants enable investors to sell back shares to the corporation at a specific price on or before a certain expiry date.

Conversion ratios exist and represent the number of warrants which are needed in order to buy or sell one share.† Conversion rations can be 1:1 or 2:1 or 3:1 or any other number.†

Purchasing warrants can be a high-risk investment, as it is extremely possible that warrants expire worthless if the warrant strike price is greater than the market price.†

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