Business and Personal Finance Dictionary

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• ENDOWMENT WARRANT
  
  A Call Options on shares, where the strike price grows at the rate of interest, but shrinks by the amount of the dividends that the share pays. In essence, the buyer of an Endowment Call Warrant uses the dividends from the shares to pay off the strike price, but is not obligated to complete the transaction. If at expiration the balance reaches zero, then the buyer may take delivery without further payment. If the balance reaches a positive amount, then the buyer may pay that amount and take delivery. If the balance reaches a negative amount, then the buyer may settle in cash for the value of the shares plus the absolute value of the balance. (Source: Australian Financial Review Dictionary of Investment Terms.)
  
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