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CAPITAL MARKET

Share & Debentures

  • WARRANTS

    A warrant, like an option, gives the holder the right but not the obligation to buy an underlying security at a certain price, quantity and future time. However, unlike an option, an instrument of the stock exchange, a warrant is issued by a company. The security represented in the warrant (usually share equity) is delivered by the issuing company instead of an investor holding the shares.

    Companies will often include warrants as part of a new-issue offering to entice investors into buying the new security. A warrant can also increase a shareholder’s confidence in a stock, if the underlying value of the security actually does increase overtime.

  • PREFERENCE SHARE

    Preference shares are a hybrid security that is not heavily utilized by corporations as a means of raising capital. It is hybrid because it combines some of the characteristics of debt and of some equity. Legally a preference share represents a position of the ownership of the company, and thus shown in the balance sheet with the equity shares as making up the capital stock or equity interest.