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    Convertibles vs. Warrants

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    What are some of the advantages or disadvantages to the company using warrants or convertibles and vice versa. What are the differences between them? Research and name a company that has used one of these securities.

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    First, let us try to understand what convertible bonds and warrants are.

    Warrants are call options that give the holder the right, but not the obligation, to buy common stocks directly from a company with a fixed exchange rate for a given period of time (usually long). Warrants are generally privately issued and not traded on exchanges.

    Convertible bonds are bonds with warrants. If the bond holder wishes, he could trade in his bond for stocks (at a fixed rate). If not, the bond holder holds the ...

    Solution Summary

    This 392 word solution provides a detailed definition of both convertible bonds and warrants, and clearly discusses why and why not a firm might want to issues either of these securities.