Date of Award

5-1-1967

Document Type

Independent Study

Degree Name

Master of Business Administration (MBA)

Abstract

The common stock warrant, a security traded on most stock exchanges, is little known to the investing public. This is an evaluation of the common stock warrant as an investment. This study briefly describes corporate securities and the role of the common stock warrant. The reasons corporations issue common stock warrants, as well as stocks and bonds, are appraised.

The reservations and restrictions, applicable to common stock warrants, by the Securities and Exchange Commission are considered. The study discusses how each common stock warrant issue confers upon the holder the privilege of exchanging them for the common stock of a company.

Leverage or "trading on the equity" with the use of common stock warrants and the large price swings that are possible, due to the volatility of the common stock warrant, is presented. An illustration demonstrating how warrants are used in a short sale and hedge operation is included. It is possible to use the common stock warrant in a variety of security situations and it is recommended for investment purposes.

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