The Worth of a Warrant (1)

Warrant(1)

Transferable subscription rights (TSRs) or

warrants (as they are now more commonly called) give the holders

the right but

not the obligation,

to subscribe for new ordinary shares at a pre-determined exercise price within a stipulated validity time frame (exercise period).

The warrants become worthless after the expiry of the exercise period.

Warrants are thus a form of call options.