Cum Warrant

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DEFINITION of 'Cum Warrant'

A discount bond with an attached warrant that allows the holder to acquire shares of the issuing company at a specific price and within a specific time frame, usually lasting several years. A cum warrant is similar to convertible debt, but when the holder exercises the warrant, she retains ownership of the bond, whereas when she exercises convertible debt, the bonds are exchanged for stocks.

BREAKING DOWN 'Cum Warrant'

A cum warrant is more commonly called a "bond-cum-warrant" or "cum-warrant bond." Unlike a convertible bond, a cum warrant can be detached from a bond and either instrument can be sold separately before the warrant is exercised. The bond then becomes an ex-warrant bond with a lower value than the original bond.

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RELATED FAQS
  1. How are stock warrants different from stock options?

    A stock option is a contract between two people that gives the holder the right, but not the obligation, to buy or sell outstanding ... Read Full Answer >>
  2. 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 >>
  3. 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 >>
  4. 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 >>
  5. 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 >>
  6. 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 >>

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