Wedding Warrant


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."

BREAKING DOWN '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.

  1. Preferred Stock

    A class of ownership in a corporation that has a higher claim ...
  2. Bond

    A debt investment in which an investor loans money to an entity ...
  3. Call Date

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

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

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

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