# Underpricing (seasoning process)

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- Post ID: 593572
- Modified: 2023-07-25T21:12:46+00:00
- Language: en

## Definition

Unless otherwise defined, the favorable difference (positive difference) between the initial quotation of a newly issued security (share, bond) and the issue price, also called the subscription yield (money left on the table). - The reverse phenomenon, where the issue price is higher than the initial listing price, is known as overpricing. - Underpricing is explained by various reasons, such as - as a result of asymmetric information distribution between informed and uninformed investors, - caused by asymmetric information distribution between issuing house and issuer or - as an effect of asymmetric information distribution between issuer and investors. A number of other causes, in particular interest rate and exchange rate changes between the offer to sell and the issue, are discussed in the relevant literature. - See issue price, over-allotment option. Attention: The financial encyclopedia is protected by copyright and may only be used for private purposes without express consent! University Professor Dr. Gerhard Merk, Dipl.rer.pol., Dipl.rer.oec. Professor Dr. Eckehard Krah, Dipl.rer.pol. E-mail address: info@ekrah.com https://de.wikipedia.org/wiki/Gerhard_Ernst_Merk https://www.jung-stilling-gesellschaft.de/merk/ https://www.gerhardmerk.de/

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