Wedding Warrant

AAA

DEFINITION of 'Wedding Warrant'

A warrant that can only be exercised if the host asset, typically a bond or preferred stock, is surrendered. Until the call date of the host asset is reached, the warrant can only be exercised if the holder surrenders an equal amount of host asset. The time period in which the investor has to surrender the equal amount of host asset is set in the warrant itself. After that time has passed, the warrant's holder can buy non-callable bonds.

Also known as "harmless warrant" or "wedded warrant."

INVESTOPEDIA EXPLAINS 'Wedding Warrant'

Wedding warrants are so named because the warrant is "wedded" for a certain period of time, and can only be "divorced" from the host bond after that time has passed. Wedding warrants were introduced as financial products in the 1980s. Investors typically don't use them because they have to hold the warrant for a long period of time until the call date is reached, or risk having to buy the host bond as well.

RELATED TERMS
  1. Call Date

    The date on which a bond can be redeemed before maturity. If ...
  2. Call Warrant

    A financial instrument that gives the holder the right to buy ...
  3. Warrant

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

    A debt investment in which an investor loans money to an entity ...
  5. Preferred Stock

    A class of ownership in a corporation that has a higher claim ...
  6. Harmless Warrant

    A warrant that requires the holder to surrender a similar bond ...
Related Articles
  1. A User's Guide To Warrants
    Options & Futures

    A User's Guide To Warrants

  2. Warrants: A High-Return Investment Tool
    Options & Futures

    Warrants: A High-Return Investment Tool

  3. 5 Equity Derivatives And How They Work
    Options & Futures

    5 Equity Derivatives And How They Work

  4. Extended Warranties: Should You Take ...
    Budgeting

    Extended Warranties: Should You Take ...

comments powered by Disqus
Hot Definitions
  1. Accounts Payable - AP

    An accounting entry that represents an entity's obligation to pay off a short-term debt to its creditors. The accounts payable ...
  2. Ratio Analysis

    Quantitative analysis of information contained in a company’s financial statements. Ratio analysis is based on line items ...
  3. Days Payable Outstanding - DPO

    A company's average payable period. Calculated as: ending accounts payable / (cost of sales/number of days).
  4. Net Sales

    The amount of sales generated by a company after the deduction of returns, allowances for damaged or missing goods and any ...
  5. Over The Counter

    A security traded in some context other than on a formal exchange such as the NYSE, TSX, AMEX, etc. The phrase "over-the-counter" ...
  6. Earnings Before Interest After Taxes - EBIAT

    A financial measure that is an indicator of a company's operating performance. EBIAT, which is equivalent to after-tax EBIT ...
Trading Center