Cum Warrant

AAA

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
  1. Naked Warrant

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

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

    The trading of shares when a warrant has been declared but not ...
  4. Covered Warrant

    A type of warrant that allows the holder to buy or sell a specific ...
  5. Harmless Warrant

    A warrant that requires the holder to surrender a similar bond ...
  6. Undetachable Stock Warrant

    A right attached to a bond that can be redeemed for stock, but ...
Related Articles
  1. Options & Futures

    A User's Guide To Warrants

    These investment vehicles are relatively uncommon in the United States, but they do still appear in U.S. markets.
  2. Options & Futures

    Warrants: A High-Return Investment Tool

    Discover the advantages of this largely unexploited investment vehicle.
  3. Options & Futures

    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. The warrants are extra benefits that give their holders the right ...
  4. Options & Futures

    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 stocks at a specific price and at a specific date. Options ...
  5. Markets

    The 5 Types Of Earnings Per Share

    A look at the five varieties of EPS and what each represents can help an investor determine whether a company is a good value, or not.
  6. Personal Finance

    When Warranties Aren't Worth It

    Before you fork over the extra cash for the extended warranty, find out what kind of return you can expect.
  7. Investing Basics

    Warrants And Call Options

    Warrants and call options are securities that are quite similar in many respects, but they also have some notable differences. Both give the holder the right, but not the obligation, to buy a ...
  8. Investing Basics

    Investing In Stock Rights And Warrants

    Many companies choose to issue rights or warrants as an alternative means of generating capital to avoid dilution of existing share value.
  9. Investing Basics

    Warrants

    Learn more about this derivative security.
  10. Bonds & Fixed Income

    Are High-Yield Bonds Too Risky?

    Despite their reputation, the debt securities known as "junk bonds" may actually reduce risk in your portfolio.

You May Also Like

Hot Definitions
  1. Santa Claus Rally

    A surge in the price of stocks that often occurs in the week between Christmas and New Year's Day. There are numerous explanations ...
  2. Commodity

    1. A basic good used in commerce that is interchangeable with other commodities of the same type. Commodities are most often ...
  3. Deferred Revenue

    Advance payments or unearned revenue, recorded on the recipient's balance sheet as a liability, until the services have been ...
  4. Multinational Corporation - MNC

    A corporation that has its facilities and other assets in at least one country other than its home country. Such companies ...
  5. SWOT Analysis

    A tool that identifies the strengths, weaknesses, opportunities and threats of an organization. Specifically, SWOT is a basic, ...
  6. Simple Interest

    A quick method of calculating the interest charge on a loan. Simple interest is determined by multiplying the interest rate ...
Trading Center