SUBSCRIPTION WARRANT Meaning and
Definition
-
A subscription warrant, also known as a subscription right or subscription option, is a financial instrument that gives the holder the right to purchase additional securities directly from the issuing company at a predetermined price, typically below the current market price. It is often used as an incentive to encourage existing shareholders or bondholders to maintain their interest in the company.
Subscription warrants are typically distributed to existing shareholders in proportion to their current holdings. They may be detachable from the original security, allowing the holder to sell or exercise them separately. The warrant has a designated exercise price, which is the price at which the holder can purchase the additional securities. This exercise price remains fixed over the life of the warrant.
The warrant provides the holder with a certain period within which they can exercise their right to purchase the additional securities. This period is known as the exercise period or subscription period, and it is typically specified in the warrant agreement. After this period expires, the warrant loses its value.
Subscription warrants can be beneficial to investors as they provide the opportunity to increase their ownership stake in the issuing company at a predetermined price. They can also generate additional income for the company when exercised, as the exercise price is usually set slightly higher than the current market price. However, there is the risk that the market price may not exceed the exercise price during the exercise period, resulting in the warrant expiring worthless.
Common Misspellings for SUBSCRIPTION WARRANT
- aubscription warrant
- zubscription warrant
- xubscription warrant
- dubscription warrant
- eubscription warrant
- wubscription warrant
- sybscription warrant
- shbscription warrant
- sjbscription warrant
- sibscription warrant
- s8bscription warrant
- s7bscription warrant
- suvscription warrant
- sunscription warrant
- suhscription warrant
- sugscription warrant
- subacription warrant
- subzcription warrant
- subxcription warrant
Etymology of SUBSCRIPTION WARRANT
The term "subscription warrant" is composed of two words: "subscription" and "warrant".
1. Subscription: The word "subscription" comes from the Latin word "subscriptio", which means "a signing at the bottom" or "a written agreement". In this context, it refers to an agreement or contract between a customer and a service provider to receive a particular product or service regularly or for a specified period. The term "subscription" entered the English language in the 15th century.
2. Warrant: The word "warrant" originated from the Old Norman French "warant" or "guarant", which means "to guarantee or promise". It entered Middle English in the 13th century with the meaning "authorization" or "permission".
Similar spelling word for SUBSCRIPTION WARRANT
Infographic
Add the infographic to your website:
