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Simple English definitions for legal terms
interest warrant
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A quick definition of interest warrant:
An interest warrant is a type of order that a company gives to a bank to pay interest to someone who owns their bonds. It's like a promise to pay someone money for lending the company money. A warrant is also a type of paper that gives someone the right to buy shares of a company at a certain price. It's like a special coupon that lets you buy something at a discount. A warrant can also be a legal document that allows a police officer to arrest someone or search their property, but this is a different meaning of the word.A more thorough explanation:
Definition: An order drawn by a corporation on its bank directing the bank to pay interest to a bondholder.
Example: Company A issues bonds to investors. As part of the agreement, Company A promises to pay interest to the bondholders. To fulfill this promise, Company A issues an interest warrant to its bank, instructing the bank to pay the agreed-upon interest to the bondholders.
Explanation: An interest warrant is a financial instrument used by corporations to fulfill their obligation to pay interest to bondholders. It is a written order that directs the corporation's bank to pay the interest to the bondholders. The example illustrates how a company uses an interest warrant to fulfill its promise to pay interest to bondholders.