A warrant is similar to an option. It gives the investor the right, but not the obligation, to buy an underlying security at a certain price, quantity and future time. Unlike an option, however, a warrant is issued by a company - an option, on the other hand, is an instrument of the stock exchange. Companies will often include warrants as a part of a new-issue offering to attract buyers. A warrant can also increase a shareholder's confidence in a stock, provided the underlying value of the security does increase over time.

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