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
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  3. 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 Answer >>
  4. Are warrants traded by brokers?

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  5. Is there a secondary market for warrants?

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