Warrants and Convertibles

Elizabeth Chorvat and Terrence Chorvat

Chapter 20 in Cases in Financial Management:Applications for Financial Analysis, 2023, pp 323-354 from World Scientific Publishing Co. Pte. Ltd.

Abstract: This case addresses securities that allow the holders to acquire stock directly from the issuing corporation either by purchase (warrants) or by exchanging convertible debt of the corporation for its stock. One can deem warrants and convertible debt as two different types of the same category of securities. That is, convertible notes can be thought of as debt with an embedded warrant allowing one to view both of them as securities that allow the holder to purchase stock directly from the issuer. The case discusses when a corporation might want to issue these types of securities and examines in particular the issuances of convertible debt by Amazon and Tesla. These two examples illustrate different strategies for the use of these securities.

Keywords: Corporate Finance; Financial Management; Financial Tools for Analysis and Application (search for similar items in EconPapers)
JEL-codes: G3 G31 G32 G34 (search for similar items in EconPapers)
Date: 2023
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