Below is a Glossary of Terms in Alphabetical Order. Click on the titles to toggle the explanation.
Note that these are definitions as it is understood by the author of this website and as such are meant to help readers. The descriptions have on legal foundations and no rights can be derived from them.
In case of a tender offer or miscellaneous offer, the acceptance period is the period in which shareholder can accept the offer. They would usually do so by sending an instruction to their broker or custodian.
When one company takes over another company. You can find more about Acquisitions on our Acquisition Page as well.
The actual settlement date is the date at which securities and cash factually settle in the account of the counterparties in a trade. Depending on which market, a trade settles 2-, 3- or even more days after the trade date. Please also refer to Trade date, Contractual settlement date below in this list.
Certificates that represent ownership of a given number of shares dealt separately from the underlying stock. They are issued by US banks and usually traded in US$. For example, British Airways, BG (British Gas) and Lastminute.com all trade in the United States as ADRs.
A legal document sent to shareholders during a Rights Issue. It represents the unconditional right to buy new shares. Shares should be paid for in advance. Allotment letters can be traded as renounceable documents, where the seller signs over the rights to a buyer.
Option contract that is exercisable at any point in time during the exercise period. A European style option is only exercisable at the expiry date.
The date at which a corporate actions event is officially announced. The announcement can either be made by the issuer or by the lead agent in the market.
One of the three forms of moneyness of a derivative (in-the-money, at-the-money and out-of-the-money). When “at-the-money”, the price of the underlying security is exactly the same as the strike price of the derivative.
In some markets the Central Securities Depository (CSD) will auto-compensate for trades that trade and settle over the Ex Dates (resulting in claims). In effect this means that for every trade that settles over the Ex Date, it will consequently debit the seller the entitlement that was attached to the shares and credit the buyer with it. The attached entitlement could for example be a right in the case of a Rights Issue or a cash proceed in the case of a Capital Return event. The advantage of this is that both the seller and the buyer only have to reflect what the CSD has done (for which they will receive SWIFT message confirmation) in their own books rather than having to contact one another to claim from each other.
A group of securities that can be traded, managed and tracked as one entity. Also derivatives can be issued relating to a basket of underlying securities. One of the aims of creating a basket is to spread risk. If there is a Corporate Action Event on the Derivative (for example a Warrant Expiration) then the Paying Agent will calculate the prices from the underlying basket to see if the warrant in in the money.
Securities can either have “bearer” or “registered” form. Let’s imagine that in the past, when securities were in paper form, a shareholder would go to their bank and take the paper with them to collect for example a dividend. As proof that the dividend was paid out, the bank employee would tear off one of the many coupons from the share. The name of the shareholder was not registered anywhere by the issuer of the security. The bank could go to the issuer and exchange the coupon for the dividend payment. The distinction between bearer and registered shares is still made even though the shares are now held in dematerialised form (i.e. electronically).
The individual who enjoys the benefits of owning a security or asset, regardless of whose name the title is in.
A form of debt security issued by a Company or Government that earns interest for the investor. Bonds normally have a fixed life and are repaid at maturity after a set number of years. Also referred to as Loan Stock.
Sometimes, for example in a rights issue event. the price at which shareholders can subscribe to new shares is being established by calculating the weighted average of share prices and trading volumes over a certain period of time. This method of calculation is called book building.
Another form of book building is when investors are asked to indicate, either on a firm or uncommitted basis, the best price that they will offer and the maximum number of shares that they will buy at particular times. This information will establish the most appropriate offer price for the issue.
A term that refers to the fact that securities are no longer held physically (as pieces of paper) but digitally in computer databases. This is also referred to as “dematerialised” or “immobilised” form.
The value of a company’s assets as shown in the Annual Report and Accounts.
Business days in the financial world around the globe are (with exceptions) generally weekdays (Monday-Friday). Weekends and Public holidays are generally not considered as business days. But with Corporate Actions being processed across several markets, it becomes important to know when countries have their public holidays. What seems to be commonly accepted as the leading factor for Corporate Action Processing is the Holiday Calendar of the issuer (I)CSD. This means it is possible that Corporate Action events are being processed on public holidays in countries where the public holiday calendar differs from that of the Issuer (I)CSD. This brings extra risk to the process because it’s easy to miss an event update, deadline or a Pay Date this way.
Buyer Protection is a process which originates from the settlement cycle having a different trade date and settlement date (T+2 or T+3 days for example) and the fact that there is a deadline for elections in voluntary events and mandatory events with options. If the buyer is buying the securities before the deadline but won’t get the securities in their account in time, they are allowed to pass their instructions on to the seller who can instruct their broker on the buyer’s behalf instead. Proceeds can then be re-aligned on the Pay Date of the event as well. Each event announcement will include the official Buyer Protection Deadline as well so that every buyer knows by what time their instruction can be given latest and every seller knows by what time they’ll still need to accept instructions from the buyer.
A contract giving the investor (the buyer of the call option) the right, but not the obligation, to buy shares at a fixed price (the strike price) within a certain time frame (up to the expiry date of the contract).
A payment made for the Subscription for new securities, or in payment for sums outstanding to the issuer, in relation to existing Securities (commonly in the context of Rights Issues, Open Offers or partly paid securities).
The tax that needs to be paid over profits that were made from holding securities – ie a percentage has to be paid over the difference between the price at which a security was sold and the price at which is was bought. Several Corporate Actions events result in profits over which capital gains tax needs to be paid. Please refer to our TAX section for more info.
A Cash Distribution is a Corporate Action event whereby the proceeds consist of cash only (so no stock component).
CCP stands for Central Counter Party and these are organisations that operate in several European markets. Their aim is to make trading securities easier. They do this by “standing in between” the seller and the buyer in a trade. This means that CCP’s become the seller to the buyer and the buyer to the seller. There are several advantages for both the seller and the buyer one of them being that it takes away the counter party risk. When trading through a CCP, the terms are on a guaranteed settlement basis. So in case the buyer lacks funds in their account on the settlement date of the trade or the buyer hasn’t got enough securities in their account the CCP will guarantee the settlement (either by lending the lacking cash to the buyer or buying in the missing shares for the buyer). From a Corporate Actions point of view this means that there is an added layer of complexity and risk added to the mix, especially around the important dates of the events.
Crest Depository Interests are independent Securities, constituted under English Law, which may be held, transferred and settled within CREST. CDI holders will not be the legal owners of the shares to which they are entitled as a result of a Corporate Action. They will however, have an interest in the shares through their ownership of CDIs.
If an investor holds securities of a certain company (the issuer of the securities), they will hardly ever hold these shares directly with the company. Instead, there is usually a group of companies linking the investor CDS to the end investor. These companies can be custodians, broker dealers, funds managers, trading platforms, pension funds, retail banks etc. This group of companies are referred to as the chain of intermediaries and more information about each layers of intermediary company and their roles around Corporate Actions can be found on this website on the industry structure page.
Due to the Settlement Cycle, trades can be traded “over ex”. This means that the security was purchased with the entitlement, but that the entitlement will get distributed to the seller, because they will still have the shares in their account on the record date. The buyer has to claim the entitlement from the seller. In corporate actions claims result in two types of actions: Compensations and Transformations.
Compensation is the amount of money or amount or additional securities a purchaser receives from the seller if they had bought the shares before the Ex Date of the event and the shares settled in their account after the Ex Date.
So for example: Person A buys 100 shares from Person B before the Ex Date of a cash dividend. The shares and the price he pays for them however, settle after the Ex Date. This means that the seller of the shares will receive the cash proceeds as a result of the cash dividend, while the buyer is entitled to them. The buyer has to CLAIM the cash proceeds from the seller. Note that with the implementation of the Record Date on Ex date +1 the amount of claims during each Corporate Actions Event has drastically declined.
A bond that may be converted into a fixed number of shares (sometimes at a fixed price). There can be certain time frames in which conversion is not permitted during a year. Sometimes conversion is only possible at (a) certain date(s) during the year. If the Bond has not been converted into shares at maturity, it will be redeemed for cash just like any normal bond. Convertible bonds pay interest just like normal bonds.
This glossary wouldn’t be complete without it!
An action impacting a security or its holder.
A numbered part of a security on which interest is being paid out. Nowadays mostly used in combination with Debt Instruments like Bonds.
CREST is the UK’s electronic registration and settlement system for equity share trading. In other words it is the book entry transfer system for UK and Irish registered equity and corporate stocks.
Cum is Latin for “with”. When one is trading shares “cum” it means that one is trading the shares “with” the entitlements to a certain corporate actions event. When one is trading shares “ex” it means that one is trading the shares “without” the entitlements to a certain corporate actions event.
A company that sells information about corporate actions events to the financial services industry.
Default refers to the course of action that will be taken in case no instruction is received from the shareholder as to what decision to make.
The sum of all liabilities of a company.
Form of debt. Like a bond it pays a fixed rate of interest.
The delivery of the cash and stock proceeds as a result of a Corporate Actions event. Distributions can be Mandatory (the investor has no choice about what they receive) or Mandatory with Options (the investor has a choice in what proceeds they receive, for example cash or stock).
The part of the nett profit of a company that will be paid out to its shareholders
Short for Dividend Reinvestment Plan. Cash proceeds of the dividend can be used to re-invest in the stock.
In voluntary events and in mandatory events the holders of the security are being given a choice and consequently they have to send an instruction with their decision.
Fixed amount of time during which elections can be made by the investor and sent up the chain of intermediaries. In the even announcement the Election Period will be announced as “Election Period Start Date” and “Election Period End Date”.
Issuance of new (primary emission) or already existing (secondary emission) shares, bonds or other securities.
The end investor can be a natural person or a legal entity who bought the security. They will generally be the party that holds the voting rights and that is entitled to payments from the company (like dividends, interest payments etc). The End Investor does not have to be the registered owner (the owner who is registered in the issuing company’s “register of shareholders” as the owner of the stock). The stock can also be registered in a nominee name (also referred to as street name), for example that of the stock broker.
The sum of all the possessions of a company
Making use of your right (for example to buy shares at a given price)
The date at which a stock will trade “cum ex” (without entitlement).
“Ex” is the Latin word for “without” and “Cum” is the Latin word for “with”. So for example in a normal cash dividend, if the ex date is 25.11.2008 then the stock will trade without the right to the cash dividend from the 25.11.2008 onward.
1) The date at which an option or a warrant expires, and therefore cannot be exercised any longer.
2) The date at which a Tender Offer expires, i.e. the day up until shareholders can tender their shares to the offer.
In several Corporate Actions events, ratios are involved that will lead to entitlements that are less than one share. For example in a reverse stock split where every 10 shares entitle the shareholder to receive one new share (ratio = 10:1), shareholders who hold let’s say 9 shares before the reverse split will be entitled to 0.9 shares after the reverse split. Securities are generally not tradeable in amounts less than 0, so the lead agent can choose to round up or down, or cash compensate the shareholders for fractions.
There are two types of occurrences: 1) Fractions can be “left behind” on the original security and 2) Fractions can be created on the newly distributed security. The event announcement should include details about fractional handling in the messaging.
A future is a contract between a buyer and a seller, whereby the buyer agrees to buy a predetermined amount of a product at a predetermined price at a predetermined date in the future. Please note the difference between a future and an option: with a future, there is the obligation to buy/sell, whereas with an option there is the right to buy/sell
When futures are created around stock that have Corporate Actions Events impacting them, the future contracts need to be re-written as well. For example, a future binds two parties to buy/sell security of company ABC for USD 10 at the end of 2009. However, company ABC initiates a Stock Split in November 2009. The ratio of the stock split will need to be included in the future contract as well as the price per share. The same applies to options and warrants.
When you divide a company’s total debt by its total equity you will get a percentage. The higher the percentage, the higher the risk of investing in the company. Certain Corporate Action events, like for example a Bond Issuance will affect the Gearing ratio.
Payments as a result of a corporate actions event can be “gross” or “net”. Gross means payment before tax has been deducted, net means payment after tax has been deducted.
Another form of debt (like bonds and debentures). They are Government bonds in the U.K., India, and several other Commonwealth of Nations countries and are known as Gilts. Gilts are the equivalent of U.S. Treasury bonds/bills. Common Corporate Actions Types for Gilts are Interest Payments (Coupon Payments) and Final Redemptions.
A couple of things come together here:
1) An investor buys the stock which is subject to an elective Corporate Actions event, for example an Exchange Offer, which has a deadline.
2) The settlement cycle of stocks, meaning that a trade is traded on one day, but the cash stock settlement happens at a later day (in most markets in 2019 this is T+2). For equities in most countries the legal ownership transfers on the Trade Date of the Event, meaning that the buyer should be allowed to elect on the stock if the trade date of the trade is on or before the market deadline of the event.
The Guaranteed Participation Date is the last date at which the buyer can buy the stock with the rights attached to participate in the elective event. The Guaranteed Participation Date is announced in the Corporate Action event notifications (Swift tag is “GUPA”) so all parties can find out what the GUPA is and sellers will have to accept elections from the buyer and elect on their behalf (this process is called buyer protection).
The name of an individual or entity that an issuer carries in its records as the registered holder. (not necessarily the beneficial owner) of the issuer’s securities. Dividends and other distributions are paid only to the holders of record also called shareholder of record or owner of record.
When a Company or a Country (think Argentina and Greece as prime examples) can’t repay their debts, they often initiate a program called a Haircut whereby all outstanding debt instruments are being redeemed at only a certain percentage of their nominal value. The part that is not paid back is then a realised investor loss in the debt restructuring. From a Corporate Actions points of view this means that Conversion Events are being processed across a range (hundreds) of securities whereby – often – holders will get options to receive their proceeds in Cash, (new) Stock or a mixture. These can be events of a great magnitude, both for the investors as well as for all the people in the industry processing these.
The letters stand for “International Central Securities Depository”. It is in fact a National Central Securities Depository through which international securities (Eurobonds for example) can be held, traded and settled. The most well-known ICSD’s are: DTCC, Clearstream, Euroclear and Six SIS. One of their responsibilities is to process Corporate Actions Events across the securities that are held within the ICSD’s.
Tax that needs to be paid over income resulting from holding securities. For example; income tax needs to be paid over a cash dividend. Read more about Tax and Corporate Actions.
The date at which the counter parties agree the trade is due to settle. The standard in most countries (and in T2S) is that the Intended Settlement Date is 2 days after the Trade Date (T+2)
For many events an interim security is used. It is a temporary security with an official identification number (ISIN) and investors can transfer it, but it is not listed and pricing anywhere. From the issuer’s point of view the security is not listed on their books.
As described under Chain of Intermediaries, these are the financial institutions that provide security and cash accounts for investing and trading. These are the companies through which the Corporate Actions events cascade down from the Issuer of the stock to the investor.
A (I)CSD that holds securities (on behalf of an investor) at another (I)CSD (the Issuer CSD). It is the Issuer (I)CSD that initiates the Corporate Action event (or at which the event is initiated by the lead agent), but both will have to process Corporate Action Events.
ISIN stands for International Securities Identification Number. As securities are held in de-materialised form and essentially are numbers in databases, each newly created security is being allocated unique numbers or codes to identify them. There are several institutions who issue these type of numbers/codes. The ISIN is issued by ANNA (the Association of National Numbering Agencies). Each country tends to have its own National Numbering Agency which come together under the umbrella organisation called ANNA.
When Corporate Actions are involved, often new securities need to be created and dispersed to investors (albeit temporary for processing purposes only or regular securities).
The ISIN is made up of 12 digits whereby the first two represent the country code, for example NL0000012345 for the Netherlands and SE0000067890 for Sweden.
ISO stands for International Organisation for Standardisation. From a Corporate Actions point of view it is the organisation that defines the standards in particular for messaging used between intermediaries in the financial system to communicate about the Corporate Actions. At the moment there are two standards: 1) ISO15022 and 2 ISO20022. Both standards are implemented using the Swift Messaging Network.
The company or organisation that issues the stock and sells it to the investors. It is often the issuer who initiates Corporate Action events, apart from offers which come from 3rd parties.
A (I)CSD that holds securities (on behalf of an investor) at another (I)CSD (the Issuer CSD). It is the Issuer (I)CSD that initiates the Corporate Action event (or at which the event is initiated by the lead agent), but both will have to process Corporate Action Events.
JIRA is a tool developed by Australian Company Atlassian. It is used for bug tracking, issue tracking, and project management. Many people working in a Corporate Actions Environment will use this system to raise and track technical problems.
Corporate Actions is a of course a serious business and the events are often surrounded by a sense of stress.
A small joke here and there is occasionally observed though…! 🙂
A warrant or an option is knocked out (becomes worthless) once the underlying instrument hits a level before the maturity of the warrant. The event is described in the term sheet of the warrant. An Event will be set up to notify the holder of the occasion and the warrant will be booked out worthless.
Equally, if there is a Corporate Action impacting the underlying securities of the warrant, then the term sheet of the warrant needs to be updated accordingly.
Rights in a rights issue event and warrants can lapse if they are not sold or exercised by the owner before the deadline. Lapsing can be either “worthless” or “versus money”. In case rights or warrants lapse worthless, they will just be booked out of the account of the investor free of payment on the day they lapse. In case of for example a rights issue the rights can be bought by interested parties after which they can be booked out of your account versus payment. In some countries there will be lapsed proceeds.
It is possible to lend shares to parties in the market in return for a fee. Often this is done in order to cover for “short positions” on the borrower’s side.
If Corporate Actions impact on the stock being lent out, then the lender will often recall the stock. Should this not be possible then any payments resulting from the Corporate Action will need to be re-aligned and in case of elective events, instructions need to be passed on so that the borrower can instruct on the lender’s behalf.
The opposite of a short position (see below). The investor expects this stock to rise in value and therefore keeps it in their account.
Corporate Actions take place on long positions and on pending positions of stock that is bought but yet to settle.
Also being referred to as the “4-eye Principle”, Maker – checker refers to the concept that everything that is being done needs to be approved by at least one other person. In Corporate Actions this is due to the perceived risk that is attached to actions that are being made.
A mandatory Corporate Actions event is an event in which the shareholder has no choice. The event will happen regardless of their approval. (most of the time mandatory events do require shareholder approval at the AGM though).
The buyer needs to be compensated by the seller, because the seller receives the benefit of the Corporate Action whereas the buyer is entitled to it. Read more about Market Claims in our Market Claims Section.
The market value of a share is the price at which it is being traded on the stock exchange. There are many methods to establish the value of a share.
Payments as a result of a corporate actions event can be “gross” or “nett”. Gross means payment before tax has been deducted, nett means payment after tax has been deducted.
Securities can be fully paid or nil paid. Securities, like for example nil paid rights, that don’t represent a share in the issuer’s capital are called nil paid. Therefore the holder doesn’t have to pay for them.
This is the value of a share when it was first issued by the company. The total nominal value of all shares represents the total nominal value of equity on the balance sheet of the company. The nominal value of a share is not the same as the market value.
An official message in which an event or an entitlement payment is announced or confirmed. The standard that is widely used in the industry is the ISO Swift Messaging.
Ordinary shares as opposed to preferred shares carry no fixed dividend obligations. Also, a dividend on ordinary shares can only be paid out after the obligations of the preferred shares have been met by the company (i.e. the dividend has been paid out on them). In case of a bankruptcy of the company, the holders of preferred shares will receive payment before holders of ordinary shares will. Ordinary shares carry voting rights, which will entitle the holder to cast his vote on AGM’s and EGM’s – preferred shares usually do not carry voting rights.
One of the three forms of moneyness of a derivative (in-the-money, at-the-money and out-of-the-money). When “out-of-the-money”, the price of the underlying security is such, that the derivative will be worthless when exercised.
In finance, a Pool Factor is a number expressed as a factor of one that is used to indicate the remaining principal balance of the note. Pool factors are only used to describe specific classes of securities, namely pooled Asset Backed Securities and Mortgaged Backed Securities whose component payments are returned to investors on a monthly basis. Pool factors are published monthly for Ginnie Mae, Fannie Mae, and Freddie Mac mortgage-backed securities.
To calculate the pool factor:
Outstanding Principal Balance / Original Principal Balance = Pool Factor
For example, a pool factor of 0.523 indicates that for each note of $10,000, $4,770 of principal has been repaid.
There is quite a number of Corporate Actions Events where potential changes to the Poolfactor need to be considered and updated where applicable.
Preferred shares will have fixed terms which have been negotiated between the investor that holds them and the company that issued them. Terms can include obligations to pay dividends on preferred shares before paying dividends on ordinary shares. In case of a bankruptcy, preferred shares rank higher in priority to receive payments (after bond holders – but before ordinary shareholders). Preferred shares carry no voting rights. Usually preferred shares get converted into ordinary shares after a certain period.
The date at which your positions will be recorded in order to calculate your entitlements. So for example; if the positions in your account on record date are 100,000 shares and a cash dividend pays EUR 0.25 per share then your entitlement will be calculated as 100,000 x EUR 0.25 = EUR 25,000. The positions are recorded by the Registrar of the Company or by the CSD.
Securities can either have “bearer” or “registered” form. Registered shares are shares of which the owner’s name is registered by the issuer of the security. When for example a dividend payment has to be paid out, the issuer knows to which shareholders it should pay it to. When registered shares are traded between shareholders, the registration has to be administered accordingly which is usually done by a company called a “Registrar”.
For voluntary corporate actions events, shareholders are expected to respond with sending an instruction about their decision. The Paying Agent of the event, their Broker and Custodians will set deadlines by which the shareholders can respond latest. There is often an “offset” down the chain. So for example if the Agent sets their deadline on Friday, then the Custodian sets it on Thursday, the Broker on Wednesday etc. In most recent time these “offsets” have become hours more often than days.
Security Identification Number similar to ISIN, but one Isin can have several sedols, each of them representing the country where the shares are being held. Sedols are issued by the London Stock Exchange.
A settlement cycle is known to be the time difference between the trade date of a trade and the contractual settlement of a trade. By default most markets know a contractual settlement date 2 days after the trade date.
So for example, if person A buys 100 shares from person B on the 25.11.2008, then the trade date of the trade by default is the 25.11.2008 and the contractual settlement of the shares and the money will be scheduled to take place 2 (or 3 depending on which market) later. Actual settlement of the trade will take place in case everything is in order on the contractual settlement date.
Short positions happen when a client sells more shares than they actually own (they could do this for example when they expect the share price of the stock to go down). At the end of each day, however, they need to make sure to cover these short positions. They could do this by borrowing the shares from another party in the market in return for a fee.
Stands for “Straight Through Processing” and refers to the fact that communication between the different players in the market is in the process of being automated.
SWIFT stands for Society for Worldwide Interbank Financial Telecommunication. Swift provides the proprietary communications platform , products and services that allow its customers to connect and exchange financial information securely and reliably. It is quite similar to sending and receiving emails. Messages are being sent from and to swift addresses just like email addresses.
Some Corporate Actions Message types (in short):
MT564 Corporate Actions Notification Standard Format
MT568 Corporate Actions Notification Free Format
MT566 Confirmation of Corporate Actions Payment
MT565 Corporate Actions Instruction Standard Format
MT599 Corporate Actions Instruction Free Format
MT567 Corporate Actions Acknowledgement of Corporate Actions Instruction received
seev.031 – CA Notification
seev0.35 – CA Movement Preliminary Advice
seev.036 – CA Movement Confirmation
seev.032 – CA Event Processing Status Advice
seev.042 – CA Instruction Statement Report
Transformation are the second type of Compensations alongside Claims. They occur in corporate actions events where the Isin or the nominal changes. All trades instructed before the Effective Date have to be cancelled at the end of the Record Date and they have to be replaced by new trades in which the new Isin and/or Event ratio have been applied.
For example: A 10:1 stock split takes place with ex date 25.11.2008. “A” instructs to buy 100 shares from “B” with trade date 25.11.2008 and contractual settlement date 27.11.2008 at EUR 1000 (the price per share = EUR 10). On the Record Date, the pending trade will have to be reversed and replaced with a new trade for 1000 shares at EUR 1000 (the price per share post split = EUR 1).
The instrument such as shares, commodities, currencies or indices on which warrants or options contracts are based.
In the case of rights issues or IPO’s, the issuing company can look for assurance that the issue will be successful. It can choose to sign purchase agreements with intermediaries who agree to buy all the newly issued shares that they can’t sell to the market. That way, the company can be sure it will receive all the money it was looking for and the issue will be classified as successful by the media and investors (preventing reputational damage for the issuer). Underwriting can be a tricky business. In case the price proves too high and no other investors take up on the offer, the underwriter has to buy all the securities at a high price. Underwriters charge a fee to the issuer for their services.
Stock of a company that is part of the authorised capital, but that has not yet been issued.
A voluntary Corporate Actions event is an event in which the shareholder is given a choice about what to do. The shareholder has to send an instruction to his broker to tell him what to do. Typically, in a voluntary event a shareholder can elect to TAKE NO ACTION, which means that he will not participate in the particular event.
The date at which a security and the corresponding cash flow is settled.
A derivative security that gives the holder the right to purchase or sell securities from or to the issuer of the warrant at a specific price within a certain time frame. No dividends are being paid on warrants and warrants can be traded on the market.
A bond which pays no interest through its life and which pays a capital gain by being issued at a substantial discount to the maturity value. If it is a deep discounted bond, the gain is subject to income tax.
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