Data:2009-12-12 2:34
Category: Money tips Release Date: 2006-05-24
Investors: What, the company warrants and derivative warrants What is the difference?
Lee Kum: Generally speaking, the company warrants issued mainly by the related businesses. Warrant issued for the purpose of the company in general is to raise funds or reward their employees and shareholders. When companies turn nest period, if the company's share price related to the company than the Warrant exercise price is high (more than to subscribe for card-based), investors will be entitled to exercise the purchase price of shares of related companies. Business at this time to issue new shares to fulfill its commitments, so when the company warrants will be diluted by the exercise of the rights of shareholders.
Warrant derived mainly by investment banks to issue its issuance purpose is to provide investors with a small gain relative to capital investment instruments. To subscribe for certificates, for example, expiration, if the settlement price of underlying shares is higher than the exercise price, the difference among the issuer will be returned to investors. At present are cash-settled derivative warrants, so the equity interests of the enterprises do not have any effect, in other words, derivative warrants will not be diluted equity.
Company Warrants and derivative warrants prior to maturity can be traded in the market. But the company Warrant generally low liquidity, and pricing are not comparable, because the company warrants priced mainly by the Board of Directors (authorized by the shareholders) decided, after listing the prices of warrants may rise or fall rate deviate significantly from the performance of its ordinary shares, so the transparency of low; On the contrary, the implementation of derivative warrants making system, liquidity is not a problem, while the pricing transparency is also high (with real leverage such data), and therefore warrants theoretical price decline Jieyou according to the l.
Company and derivative Warrant Warrant While the concept of similar, but different from both the risks involved. Therefore, investors in the actual sale, should contain a detailed understanding of relevant information and consider the individual's risk tolerance before deciding to invest in the company or derivative Warrant Warrant.
