I need some help understanding warrants

Hi there,

I'm hoping the more educated here could clue me up with warrants. I get the general idea, particularly instalment warrants which is what I'm looking at, but when it comes to the details my knowledge cuts out.

I'm interested in STWIMF (streettracks asx200 instalment warrrant by Macquarie). Here are it's details:

Asset Details
Instalment Type: Resetting - Regular
Gearing Level: 68% =Current Loan / Underlying Share Price
Instalment Code: STWIMF
Maturity Date: 17-11-16
Next Annual Reset Date: 17-11-08
Current Loan Amount: $ 37.0000

Current ASX Market Price
Instalment Price (offer): $ 21.56
Underlying Price (offer): $ 54.77

Income Information
Next Forecast Dividend Ex Date: 24-06-08
Forecast Dividend Amount: $ 2.2020
Forecast Franking Level : 0%
Instalment Yield To Next Reset: 4%
Instalment Yield Per Annum: 5%

Cash Application Information
Indicative Total First Payment Amount: $ 22.1297
Indicative Interest Amount: $ 2.8024
Indicative Holder's Put Option Cost: $ 0.9884
Indicative Borrowing Fee: $ 0.5689
Minimum Cash Application: $ 2000

Shareholder Application Information
Indicative Cashback Amount: $ 32.6403
Indicative Interest Amount: $ 2.8024
Indicative Holder's Put Option Cost: $ 0.9884
Indicative Borrowing Fee: $ 0.5689
Minimum Number Of Shares: 250

OK, the questions I have at this stage are:

a) what is the implied interest rate? Is it $2.8024/$22.1297 because if so, that's 12.5% Surely I've got that wrong...

b) what is the difference between the terms maturity date and the reset date?

c) what exactly happens on the 17-11-08?

d) can I hold instalment warrants forever? ie past the maturity date?

e) the inbuilt interest is a capital cost, not deductible against earnings, correct?

f) more generally, do people have a preference between Macquarie, UBS and Citibank?

Thanks heaps!

 

The only one I'm confident to answer

Once you hit the maturity date you then take on the actual share (the warrant ceases to exist).

 

Glebe try below links:

http://www.aetlimited.com.au/NR/rdo...45-8B4B-E1A630BE6204/0/INSTALMENTWARRANTS.pdf

Simple Life Simple Dream: Warrant Part 2 - Factors Influencing Price of a Warrant

About Reset Instalments

Consider some books about warrants if you are interested in generating a regular income - or/and protect a share/index-linked portfolio on the OZ Stock Market.