What is a Seasoned Security?

When a new stock or a financial instrument is newly issued and starts trading in the secondary market, its price may exhibit substantial volatility in the initial period after which the short-term effects would settle down and the price will become more stable. Once the security has been trading in the secondary market for a long enough period, it’s called a seasoned security.

For example, in the Euromarket a security becomes a seasoned security after it has been actively trading for a period of 40 days. The word seasoned reflects the fact that these securities have a certain track record and are considered worth more to the investors.

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