Offering price -
The price that investors must pay for allocated shares in an IPO.
Not the same as the opening price, which is the first trade price of a new stock.
Opening price -
The price at which a new stock starts trading.
Also called the first trade price.
Underwriters hope that the opening price is above the offering price, giving investors in the IPO a premium.
Oversubscribed -
Defines a deal in which investors apply for more shares than are available.
Usually a sign that an IPO is a hot deal and will open at a substantial premium.
Penalty bid -
A fee charged to brokers by the lead underwriter for having to take back shares already sold.
Meant to discourage flipping.
Pipeline -
A term used to describe the stage in the IPO process at which companies have registered with the SEC and are waiting to go public.
Premium -
The difference between the offering price and opening price.
Also called an IPO's pop.
Prospectus -
The document, included in a company's S-1 registration statement, which explains all aspects of a company's business, including financial results, growth strategy, and risk factors.
The preliminary prospectus is also called a red herring because of the red ink used on the front page, which indicates that some information ? such as the price and share amounts ? is subject to change.
Proxy - An authorization, in writing, by a shareholder for another person to represent him/her at a shareholders' meeting and exercise voting rights.
"By Darren Chervitz, CBS MarketWatch"
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