Evidence of right
Evidence of right is the right of pre-emptive at a predetermined price during a certain period. Right evidence published in a limited public offering (rights issue), when new shares are offered first to holders of old shares. Evidence of right to give some advantage to the investor. Investors have the privilege to buy new shares at a predetermined price by showing evidence of right they have. Investors benefit because the price is cheaper to buy new shares. In addition, evidence of right can be traded in the secondary market so that investors can enjoy capital gains. On the other hand, if investors do not carefully choose the right evidence, there are some risks that may arise. If the stock price on the implementation of maturity will be lower than the implementation and investors do not convert the right evidence, he will experience a loss on the purchase price of the evidence right. Therefore the evidence right can be traded in the secondary market then there is also a risk of capital loss.
Warrants
Warrants are usually attached as an appeal to the public offering of shares or bonds. The exercise price of warrants typically lower than the price of the stock market. After the stocks or bonds listed on the stock, the warrants can be traded separately. Warrants trading period was longer than the proof of right, can reach 3-5 years.
Warrants are an option (option), when investors have the option to redeem or not warannya at maturity. Warannya owner can redeem the warrants for six months after the warrants issued by the issuer. Prices of warrants will fluctuate during the trading period.
An investor who invested in the form of warrants have the right to buy new shares from the company at a price lower than prices in the secondary market. The way to redeem the warrants held when the company’s stock price exceeds the exercise price. Another advantage is to obtain capital gains when the warrants are traded on the stock.
As for the risks faced if the stock price during the period of implementation of the fall and lower than the exercise price. Investors will suffer losses on the purchase price of such warrants. In addition, there is also capital loss due to the nature of warrants is similar to the stock, which can be traded on the stock.
