The investor in warrants

This paper investigates the profile of the individual investor in warrants. It is concluded that the average investor in warrants has a greater level of financial literacy and a greater appetite for risk. It is also concluded that higher experience in stock trading and the investment in foreign stocks facilitate the investment in warrants, which may be a result of learning by trading and of greater competence of investors. However, lower returns from the investment in stocks also favor the investment in warrants, which may mean that (at least some) warrant investors look to this market as an alternative to recover from their minor success with investments in stocks. Finally, overconfidence encourages the investment in warrants and this may lead to unsound decision-making.