||Warrant is an derivative security that gives the holder right to purchase specified number of shares at a stated price.
||Convertibles are the derivative securities in the form of bond or preferred stock which can be converted into specified number of shares of common stock on investor’s choice.
||During the exercise of warrant, additional fund is received by the company.
||During the exercise of convertibles, no additional fund is received by the company.
||Warrant is detachable in nature. ie; it can be detached from security and can be sold separately.
||Convertible is not detachable. ie; it cannot be detached from security and cannot be sold separately.
||Bonds or preferred stock remains on company’s book of accounts.
||Conversion of bonds into common stock is done. Bond or preferred stock remained is converted into common stock and removed from company’s books of accounts.
||Convertible bonds are attractive to investors because can be converted into specified number of shares of common stock on investor’s choice.