A bond that may be used at face value in combination with a warrant to purchase shares of common stock. Essentially, the issuer allows warrant owners to substitute the bond for cash when the warrants are exercised. Ownership of this type of bond is, like ownership of a convertible bond, a speculation on the direction of interest rates and on the direction of the price of the underlying stock.
Wall Street Words: An A to Z Guide to Investment Terms for Today's Investor by David L. Scott. Copyright © 2003 by Houghton Mifflin Company. Published by Houghton Mifflin Company. All rights reserved. All rights reserved.