Undetachable Stock Warrant - Explained
What is an Undetachable Stock Warrant?
Written by Jason Gordon
Updated at April 15th, 2022
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Table of Contents
What is an Undetachable Stock Warrant?How is an Undetachable Stock Warrant Used?Academic Research for Undetachable Stock WarrantWhat is an Undetachable Stock Warrant?
An undetachable stock is the same as a convertible stock, it refers to a bond that can only be converted to a stock at maturity or redemption but cannot be sold as distinct from the bond. Hence, an undetachable stock warrant gives its holder the right to substitute a bond for another security, usually a stock at redemption. Oftentimes, the security for which the bond is substituted offers better return. An undetachable stock warrant is used by holders when they want to generate profit from a bond by converting it into stock.
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How is an Undetachable Stock Warrant Used?
When a preferred stock is issued, it usually comes with a warrant, this warrant cannot be detached from the preferred stock. If the warrant holder decides to exercise the warrant right, a specific amount of stock can be purchased at a specific price. An undetachable warrant allows a holder to substitute a bond for a stock at redemption, the warrant cannot be sold separately form the bond.
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