COVERED warrants are basically derivatives which are traded in the market and “derive” their values based on the underlying shares that they represent.
Typically, warrants are issued by companies in conjunction with some other corporate exercise and this could be in the form of inducement for shareholders to subscribe for either a rights issue exercise or in some cases, they are issued as a “reward” to shareholders in the form of a bonus issue.
Warrants issued by companies can either be issued at no cost or in some cases at a nominal fee.
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