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. Covered Warrant

    A type of warrant that allows the holder to buy or sell a specific ...
  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 >>
  3. 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 >>
  4. 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 >>
  5. 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 >>
  6. Can warrants be written on any security?

    Conceptually, warrants can be written on any type of security issue. The structure of a warrant only changes the timing of ... Read Full Answer >>
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. 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.
  4. 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.
  5. 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 ...
  6. 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.
  7. Investing Basics

    Warrants

    Learn more about this derivative security.
  8. 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.
  9. Options & Futures

    Find Investment Quality In The Income Statement

    Use these key attributes to uncover top-level investments.
  10. Active Trading

    Top Perks Warren Buffett Gets When Purchasing Equities

    Learn about the many investment perks that Buffett enjoys and the rest of us can only try to imagine.

You May Also Like

Hot Definitions
  1. Moving Average - MA

    A widely used indicator in technical analysis that helps smooth out price action by filtering out the “noise” from random ...
  2. Yield Curve

    A line that plots the interest rates, at a set point in time, of bonds having equal credit quality, but differing maturity ...
  3. Productivity

    An economic measure of output per unit of input. Inputs include labor and capital, while output is typically measured in ...
  4. Variance

    The spread between numbers in a data set, measuring Variance is calculated by taking the differences between each number ...
  5. Terminal Value - TV

    The value of a bond at maturity, or of an asset at a specified, future valuation date, taking into account factors such as ...
  6. Rule Of 70

    A way to estimate the number of years it takes for a certain variable to double. The rule of 70 states that in order to estimate ...
Trading Center