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Derivatives




Harmless Warrant


A warrant which protects the issuer from a potential increase of its outstanding debt above the initial level, in the event of exercise. This is usually done by embedding a call feature into the host bond (the bond associated with the warrant). When exercised, the warrant leaves the holder with a bond that has the original terms in exception of the call feature. That is, the warrant can only be exercised by surrendering the host bond at the time of exercise (i.e., the host bond is handed in to the issuer at that time).

This warrant is also known as a wedding warrant.



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Derivatives have increasingly become very important tools in finance over the last three decades. Many different types of derivatives are now traded actively on ...
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