How Do You Spell BOUGHT DEAL?

Pronunciation: [bˈɔːt dˈiːl] (IPA)

Bought deal is a term used in finance, and it is pronounced as bɔːt diːl. The word bought is spelled with a "b" at the beginning, an "o" with a long "o" sound, followed by a "u" with a short "uh" sound, and finally, a "t" at the end. The word deal is spelled with a "d" at the beginning, followed by an "ea" with a long "ee" sound, and ending with an "l" sound. Together, they create the term bought deal, which refers to a type of agreement between an issuer and underwriter in which the underwriter purchases all of the securities offered by the issuer.

BOUGHT DEAL Meaning and Definition

1. A bought deal is a financial transaction commonly conducted in the securities market, particularly in the context of initial public offerings (IPOs). It refers to an agreement wherein an investment bank or underwriter commits to purchasing the entire offering of new securities from a company at a predetermined price, regardless of the market demand. In essence, the underwriter guarantees the issuer a certain amount of proceeds by buying the entire offering outright, should they be unable to sell the securities to other investors.

   Typically, bought deals are used to expedite the offering process, providing the company with immediate access to capital. This method reduces uncertainty for the issuer, as it eliminates the need to wait for the market to determine the offering price and guarantees a fixed amount of funds. Therefore, the company conducting the bought deal can quickly execute its financing plans and be assured of raising the necessary capital, regardless of market conditions.

   Bought deals are especially common in situations where market conditions are favorable or when the issuer is particularly attractive to investors. The underwriters assume the risk of reselling the securities, their success depending on their ability to subsequently sell the securities to investors at a higher price.

   Overall, a bought deal is an arrangement which ensures immediate access to capital for an issuer, minimizing market risk and providing a level of certainty in the securities offering process.

Common Misspellings for BOUGHT DEAL

• vought deal
• nought deal
• hought deal
• gought deal
• biught deal
• bkught deal
• blught deal
• bpught deal
• b0ught deal
• b9ught deal
• boyght deal
• bohght deal
• bojght deal
• boight deal
• bo8ght deal
• bo7ght deal
• boufht deal
• bouvht deal
• boubht deal
• bouhht deal

Etymology of BOUGHT DEAL

The word "bought deal" originated in the world of finance and investment banking. Its etymology stems from the word "deal" which refers to a financial transaction or agreement.

The term "bought" in "bought deal" indicates that the investment bank or underwriter has purchased a specific number of securities or shares from a company before reselling them to investors. This type of transaction is commonly used in the context of initial public offerings (IPOs) or the issuance of new securities.

The word "bought deal" emerged to describe this particular type of underwriting agreement wherein the investment bank guarantees the sale of the securities at a fixed price, regardless of whether they can sell them all to investors. This means that the investment bank is taking on the risk of holding any unsold securities, aiming to quickly resell them to investors shortly after purchasing them from the issuer.

Plural form of BOUGHT DEAL is BOUGHT DEALS