What is the primary purpose of warrants in finance?

The primary purpose of warrants in finance is indeed to provide a fixed price for purchasing stock. Warrants are securities that give the holder the right, but not the obligation, to buy shares of a company's stock at a specified price, known as the exercise price, before the warrant expires. This fixed price is particularly important because it allows investors to potentially profit from the appreciation of the stock's value over time. If the market price of the stock exceeds the exercise price, warrant holders can purchase shares at the lower price, effectively allowing them to benefit from the increase in stock value.

Unlike options, which are typically issued in conjunction with other securities, warrants are often issued by the company itself and can lead to the creation of new shares when exercised. This can result in dilution of existing shareholders' equity, but it also provides capital for the company upon exercise. The fixed price element is particularly beneficial for investors who anticipate future growth in the company’s stock price, as they can lock in their purchase price today and potentially gain significant returns later on.

In contrast, the other options relate to different financial instruments or concepts. Dividends relate to distributions of profits and are not linked to warrants. Voting rights are typically associated with ownership of equity shares rather than warrants.