A security issued by a ﬁrm that gives its owner the right to purchase new shares of stock at a ﬁxed price over a given period of time is called a(n):

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The security being described is a warrant, which is a type of derivative that gives the holder the right to purchase a specific number of shares of stock at a fixed price (strike price) within a specific time frame. A call option (both American and European) is a similar type of derivative, but it is typically issued by an options exchange rather than by a company issuing new shares. A put option is another type of derivative that gives the holder the right to sell a stock at a specific price within a specific time frame.

A Security Issued by a ﬁRm That Gives Its Owner