A type of issuer derivative that is usually issued with another security such as a bond or preferred stock that entitles the holder to purchase a proportionate amount of common stock at a preset price, usually above the market price, at the time of issuance, for a specific period or to perpetuity. A warrant is often issued as a sweetener, i.e., to enhance the attractiveness of the accompanying fixed income securities. It is freely transferable and tradable on exchanges.

This warrant is also referred to as a stock-purchase warrant.

Compare with subscription right.