Lessons
- Equity: Types of Orders
- Margin Trading - Purchasing Stocks on Margin
- Long and Short Positions in Financial Assets
- What is Initial Public Offering (IPO)?
- Understanding Initial Public Offering with an Example
- What is a Seasoned Security?
- What is Private Placement of Shares?
- What is Shelf Registration?
- How to Buy a DRIP Stock?
- Rights Issue of Shares
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.