Detachable Warrant

AAA

DEFINITION of 'Detachable Warrant'

A derivative that is attached to a security and gives the holder the right to purchase an underlying security at a specific price within a certain time frame. A detachable warrant is often combined with various forms of debt offerings and can be removed by the holder and sold in the secondary market separately.

INVESTOPEDIA EXPLAINS 'Detachable Warrant'

Many companies choose detachable warrants when issuing bonds because it makes a debt offering more attractive and can be an effective method of raising new capital. The exposure to the right given by the detachable warrant can often gain the attention of investors who do not usually participate in the fixed-income markets.

A detachable warrant can be traded independently of the package with which it was offered, and is similar to a call option.

RELATED TERMS
  1. Fixed Income

    A type of investing or budgeting style for which real return ...
  2. Theoretical Ex-Rights Price

    The market price that a stock will theoretically have following ...
  3. Call

    1. The period of time between the opening and closing of some ...
  4. Warrant

    A derivative security that gives the holder the right to purchase ...
  5. Bond

    A debt investment in which an investor loans money to an entity ...
  6. Secondary Market

    A market where investors purchase securities or assets from other ...
Related Articles
  1. Warrants: A High-Return Investment Tool
    Options & Futures

    Warrants: A High-Return Investment Tool

  2. I own some stock warrants. How do I ...
    Options & Futures

    I own some stock warrants. How do I ...

  3. Bond Basics Tutorial
    Retirement

    Bond Basics Tutorial

  4. Why should I keep records on my tax-exempt ...
    Taxes

    Why should I keep records on my tax-exempt ...

Hot Definitions
  1. Gross Rate Of Return

    The total rate of return on an investment before the deduction of any fees or expenses. The gross rate of return is quoted ...
  2. Debit Spread

    Two options with different market prices that an investor trades on the same underlying security. The higher priced option ...
  3. Leading Indicator

    A measurable economic factor that changes before the economy starts to follow a particular pattern or trend. Leading indicators ...
  4. Wage-Price Spiral

    A macroeconomic theory to explain the cause-and-effect relationship between rising wages and rising prices, or inflation. ...
  5. Accelerated Depreciation

    Any method of depreciation used for accounting or income tax purposes that allows greater deductions in the earlier years ...
  6. Call Risk

    The risk, faced by a holder of a callable bond, that a bond issuer will take advantage of the callable bond feature and redeem ...
Trading Center