Covered Warrant


DEFINITION of 'Covered Warrant'

A type of warrant that allows the holder to buy or sell a specific amount of equities, currency or other financial instruments from the issuer, usually a bank or a similar financial institution, at a specific price and time.

BREAKING DOWN 'Covered Warrant'

The main differences between normal warrants and covered warrants are:

1. Covered warrants can have a wide variety of underlying financial products. Normal warrants only have a company's stock as their underlying financial product.

2. Covered warrants are only issued by financial institutions. Normal warrants are only issued by the company that issued the underlying equity.

3. Covered warrants can have a variety of exercise prices depending on the conditions set forth by each issue. Normal warrants generally have only one exercise price.

4. Covered warrants allow the warrant holder to buy or sell the underlying asset. Normal warrants allow the warrant holder only to buy the underlying equity.

  1. Exploding Warrant

    An equity derivative investment instrument that gives that holder ...
  2. Naked Warrant

    A warrant that is issued without a host bond. A naked warrant ...
  3. Call Warrant

    A financial instrument that gives the holder the right to buy ...
  4. Warrant Coverage

    An agreement between a company and its shareholders whereby the ...
  5. Warrant

    A derivative security that gives the holder the right to purchase ...
  6. Ex-Warrant

    The trading of shares when a warrant has been declared but not ...
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  1. I own some stock warrants. How do I exercise them?

    Typically, stock warrants are derivative instruments added to new issues of stocks or bonds to make these issues more attractive. ... Read Full Answer >>
  2. Why should investors consider the fully diluted share amount?

    Investors should consider a company's fully diluted share amount before purchasing the company's stock, because it could ... Read Full Answer >>
  3. What's the difference between basic shares and fully diluted shares?

    Basic shares and fully diluted shares are different types of methods to measure the amount of shares investors hold in a ... Read Full Answer >>
  4. What is the difference between share purchase rights and options?

    There is a big difference between share purchase rights and options. With share purchase rights, the holder may or may not ... Read Full Answer >>
  5. Why is a company's diluted EPS always lower than its simple EPS?

    A company's diluted earnings per share is lower than its basic earnings per share because diluted earnings per share takes ... Read Full Answer >>
  6. What is a direct rights offering?

    A direct rights offering is an offer made by a company, directly to existing shareholders, granting them rights to purchase ... Read Full Answer >>

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