always be issued along with debt(bond) and used to induce investors to buy long-term debt(bond) with a lower coupon rate. eg: IBM first sell $500 of 20-year bonds in 2001,with a coupon rate(interest rate) of 10 percent; then IBM sell the same bonds only with a coupon rate of 8 percent,but it would offer 10 warrants each $100 bond,each warrant would enable the holder to buy one share of IBM common stock at any time before 2011. So investor would be willing to buy the latter. Warrant is a long-term call option,a option for stocks. The bonds and the warrants combined into a package.
