A type of financial instrument attached to a security that has a separate life and value. A warrant allows the investor to purchase ordinary shares at a fixed price over a period of time (years) or to perpetuity. The price of the shares is usually higher than the market price at the time of issue. A warrant is freely transferable and can be traded separately. Warrants are usually issued by companies for their own shares, or the shares of a subsidiary. Covered warrants are issued by banks, for the shares of other companies, or for use as a trading instrument.