A warrant is a security or a right, issued to the holders together with a bond or an instrument (like secured premium note or an equity share or a preference share,etc.) in a package, that permits the holders to purchase certain number of shares of the company in future, at an exercise price. An exercise price is a price at which the holders can buy equity shares of the company by using warrants. An exercise price is generally set higher than the market price at the time of issue of the shares. In order to raise sufficient capital, company issue warrants to the investors. This makes debt issue attractive to the investors as they would get fixed rate of interest together with an opportunity to purchase specified number of equity shares in the future, at pre-determined price.Basically the number of shares that can be purchased by using warrants depends upon the exercise ratio. This impose limitation on the purchase of equity shares of the company by the holders of warrants. Therefore it is nothing but 'sweetners' to the investors. Mark ! the holders of warrants are not the shareholders of the company. They are debentureholders. However, if they exercise their right and purchase shares of the company with warrants, they become shareholders of the company. Otherwise, after the expiry of the warrants, warrants lapses. There are two types of warrant:- detachable and non-detachable. Detachable warrants can be sold separately from the bond with which it has been tied up. The holder of such instrument would continue his right to retain that security even when he has sold off warrant tied with it. Non-detachable warrants cannot be sold separately from the bond. Hence the holder of detachable warrants can take the advantage of price rise and sell off instruments in the secondary market which is not possible in case of non-detachable warrants. Adhere to this, detachable warrants are listed in stock exchanges for trading but non-detachable warrants are not. Convertible securities are those securities which can be converted to equity shares. However, warrants are different from convertible securities (i.e. convertible debentures and convertible preference shares) in the following ways:- 1. The holder of warrants can purchase equity shares at a predetermined price whereas the holder of convertible securities exchange their securities for equity shares of the company. 2. Warrants can be sold separately from the securities with which it has been tied up. On the other hand, convertible securities cannot be separated as such. 3. At the time of exchange, convertible securities must be surrendered whereas detachable warrants are used separately for purchasing shares without surrendering the securities tied with it. 4. In case of warrants, the holder should pay cash to buy shares of the company whereas the shares are converted at conversion rate automatically in case of convertible securities,therefore no cash is required. Thus we can conclude that the real motive behind issue of warrants is to raise fund cheaply for expansion and development of the company. Adhere to this, it gives opportunity to the company, to issue equity shares in future at a premium over the current price. Like any other stock, warrants are sold or transferred in the secondary market. Warrants are long term rights provided to the investors for marketability of the securities. Previously these debentures were considered as speculative instruments as they have no value other than the right to purchase shares in future. Today warrants are one of the most important investment securities, issued by many big and reputed companies to meet their financial requirements.