Question

Difference between warrants and right?

Answer 1

Both warrants and rights issue are issued by the companies to raise the capital.

1. Warrants will have a predetermined price which expires after a certain period. Usually, warrants give the right for the holders to excercise it after a certain time period. If share price goes up, warrant holders gain from the transacation. This will be issued for the new shareholders.

2. Rights will be issued to existing shareholders at a discounted price and the shareholders will have the right to buy the issue or not.

Both these will be issued at a much discounted price. If share price goes up, the shareholders gain from that.