UNDERSUBSCRIPTION Meaning and
Definition
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Undersubscription refers to a situation where there is an insufficient level of demand or interest for a particular offering, usually in the context of financial markets or investment opportunities. In such cases, the number of bids or subscriptions received falls short of the expected or desired level, leading to an underallocation or underselling of the asset or security being offered.
In the context of initial public offerings (IPOs) or stock market flotation, undersubscription occurs when the number of shares available for purchase exceeds the number of shares requested by potential investors. This can happen when the offering price is considered too high or when market conditions are unfavorable, leading to a lack of enthusiasm among investors. Undersubscription may prompt the underwriters or issuers to adjust the offering price or increase marketing efforts to generate more interest.
In the field of bonds, undersubscription refers to a situation where the amount of bonds issued is higher than the amount subscribed to by investors. This can happen if the bond's interest rate or coupon is deemed unattractive or if investors have concerns about the issuer's creditworthiness. In such cases, the issuer may need to alter the terms of the bond or cancel the offering altogether.
Overall, undersubscription indicates an imbalance between supply and demand, where the supply exceeds the level of interest or demand for a particular financial offering or investment opportunity.
Common Misspellings for UNDERSUBSCRIPTION
- yndersubscription
- hndersubscription
- jndersubscription
- indersubscription
- 8ndersubscription
- 7ndersubscription
- ubdersubscription
- umdersubscription
- ujdersubscription
- uhdersubscription
- unsersubscription
- unxersubscription
- uncersubscription
- unfersubscription
- unrersubscription
- uneersubscription
- undwrsubscription
- undsrsubscription
- unddrsubscription
- undrrsubscription
Etymology of UNDERSUBSCRIPTION
The word "undersubscription" is derived from two root words: "under" and "subscription".
1. "Under" is a prefix that often indicates a deficiency, insufficiency, or a lower amount or degree. It comes from the Old English word "under" or "underne", meaning beneath or below.
2. "Subscription" originates from the Latin word "subscriptio", which means a written undertaking or agreement. It involves subscribing, signing, or enrolling for a service, publication, or membership.
Combining these two elements, "undersubscription" refers to a situation where there is a lower number of participants, subscribers, or investors than expected or required for a specific service, event, or offering.
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