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.

INVESTOPEDIA EXPLAINS '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.

RELATED TERMS
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  2. Covered Warrant

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  3. Harmless Warrant

    A warrant that requires the holder to surrender a similar bond ...
  4. Warrant

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

    The trading of shares when a warrant has been declared but not ...
  6. Undetachable Stock Warrant

    A right attached to a bond that can be redeemed for stock, but ...
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 >>
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