An instrument that gives its holders the right to purchase a certain number of shares of the firm's common stock at a specified price over a certain period of time is called stock purchase warrants.
Stock options are contracts that give the holder the freedom to purchase or sell a security at a certain price for a set period of time without being impacted by changes in the security's market price during that time.
A stock purchase warrant is another form of stock option.
An owner of a stock purchase warrant has the right to acquire shares of common stock at a given price (the exercise price of the warrant).
In order to make senior securities (preferred stocks and bonds) more marketable, warrants are frequently issued alongside them.
They may also be given out directly as part of the payment made to underwriters of new issues and other company promoters.
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