Absorbed. A new issue that an underwriter has completely sold to the public.

Account. The financial/contractual relationship between an issuer and an underwriting group.

Aftermarket. See Secondary Market.

Agreement Among Underwriters. The contract between members of an underwriting group (an investment banking syndicate).

Air Pocket Stock. A stock that falls rapidly, usually because of bad news and/or poor earnings.

All In. Abbreviation for "all included", which refers to the issuer's interest rate after including commissions and other expenses.

All or None. An offer that gives the issuer the right to cancel the entire issue if the underwriting is not completely subscribed.

Allotment. The amount of securities assigned to each of the members of an investment banking syndicate.

Assimilation. The absorption of a new issue by the public after all shares have been sold by the underwriting group.

Best Effort. An agreement where investment bankers agree to do their best to sell an issue to the public.

Blank Check Offering. New issue by a speculative company whose business has not been determined.

Blowout. The quick sale of all shares in an IPO.

Blue Sky Law. A law passed by many states that requires sellers of new issues to register their IPO's and provide financial details on their company.

Book. Preliminary indications of interest rate on the part of potential buyers of an IPO. Also, the record of activity in the syndicate account.

Bought Deal. A firm commitment to purchase an entire issue from the issuing company.

Breaking the Syndicate. Terminating the Agreement Among Underwriters.

Brought Over the Wall. When a member of the research department of an investment bank is utilized by the underwriting department of the same bank.

Burn Rate. Monthly operating budget required to keep operations going during a period of negative cash flow.

Chinese Wall. The imaginary wall that separates the research departments from the underwriting departments at an investment bank.

Circle. Designation by an underwriter of a potential buyer of an IPO.

Collar. The lowest price acceptable to the issuer of an IPO.

Comfort Letter. The independent auditor's letter in an underwriting agreement that assures the information in the registration statement is correct and that no changes have been made.

Cooling Off Period. The interval between the filing of a preliminary prospectus with the Securities Exchange Commission and the offering of the securities to the public. See also registration.

Date of Issue. Date when a new stock begins public trading.

Deal Flow. Rate of new deals in an investment banking department.

Distributing Syndicate. Group of brokerage firms and/or investment banks that come together in order to distribute a large block of securities. This usually only refers to secondary distributions. Primary distributions simply use the term "syndicate."

Due Diligence Meeting. Meeting held by the underwriter of a new offering at which brokers can ask representatives of the issuer questions about the background, finances and intended use of the proceeds from the new issue.

Eating Stock. An underwriter that buys stock for its own account because it cannot find buyers for an IPO.

Effective Date. Date when an offering registered with the Securities Exchange Commission may commence.

Elephants. Large institutional investors.

Fall Out of Bed. See Air Pocket Stock.

Firm Commitment. Arrangement where investment bankers purchase from the issuer of securities to be offered to the public.

Flat. The state of an underwriter's account that is completely sold.

Flipping. Buying shares in an IPO and immediately selling them for a profit.

Floating Security. Unsold units of a newly issued IPO.

Flotation Cost. The cost of issuing new stocks or bonds.

Freed Up. When the members of an underwriting syndicate are no longer bound by the price agreed upon in the Agreement Among Underwriters.

Free Riding. When an underwriter withholds a certain amount of IPO shares and later sells them for a higher price. Prohibited by the Securities Exchange Commission and the National Association of Securities Dealers.

Fully Distributed. An IPO that has been completely resold to the public.

Going Public. When a company first offers its shares to the public. The IPO of the company.

Green Shoe. A portion of the underwriting agreement that says if the IPO is extremely popular then the issuer will authorize additional shares for distribution. Refers to the Green Shoe Co., later to become Stride Rite.

Group Sales. Block sales made to institutional investors.

Hot Issue. IPO that is in great public demand.

Hot Stock. IPO that rises quickly in price. See Hot Issue.

House of Issue. The investment bank that underwrites an IPO. See underwrite.

Indication of Interest. A dealer's or investor's interest in purchasing securities that are still in registration.

Initial Public Offering (IPO). A company's first offering of stock to the public.

Insider Trading. Shares bought or sold by the company's management or board of directors. Also, by individuals that own more than 10% of the company's shares.

Institutional Investor. A firm that trades large volumes of securities, including mutual funds, banks, insurance companies, etc.

Investment Banker. The firm acting as an underwriter of an issuer. The investment banker is the conduit between the issuer and the public investors.

Issue. Stocks or bonds sold by a company. Also, the act of selling these stocks or bonds.

Issuer. The company that is becoming public via an IPO.

Kicker. An added feature of debt obligation used to entice investors. For example, a bond that can be converted to stock at a given price. Also known as a "sweetener."

Lockup Period. Usually set at 180 days after the start of trading, the lockup period defines the period during which insiders cannot trade their shares.

Managing Underwriter. The leading investment bank in an underwriting group.

Negotiated Underwriting. An underwriting where the price difference between the purchase price paid to the issuer and the IPO price is negotiated rather than by competitive bidding.

New Issue. See Initial Public Offering.

New Listing. When a company's shares first appear on an exchange. See Initial Public Offering.

Offering. See Public Offering.

Offering Circular. See Prospectus.

Offering Date. Date of the IPO.

Offering Price. See Public Offering Price.

Originator. Generally the investment bank that worked with the issuer from the beginning. Usually, the Managing Underwriter.

Oversubscribed. When there are more buyers than available shares in an IPO.

Penny Stock. Stocks that typically trade for less than $1 per share.

Period of Digestion. Time period after the IPO when the price is established by the marketplace.

Piggyback Registration. When a securities underwriter allows existing shares in a corporation to be sold in combination with an IPO.

Pipeline. The underwriting process. A company that is in the underwriting process is said to be "in the pipeline."

Place. To market new securities.

Preliminary Prospectus. The first document issued by an underwriter of a new issue to prospective investors. Also known as a "Red Herring."

Price Gap. When a stock's price quickly rises or falls from its last trading range without overlapping the range.

Primary Distribution. Sale of an IPO, versus a secondary offering.

Primary Market. The market for an IPO.

Prospectus. The formal prospectus filed with the Securities Exchange Commission. See also Preliminary Prospectus.

Public Offering. See Initial Public Offering.

Public Offering Price. The price of the new issue offered to the public by the underwriters.

Public Syndicate. See Purchase Group.

Purchase Group. Group of investment bankers operating under the Agreement Among Underwriters that agrees to purchase a new issue from the issuer to resale to the public.

Purchase Group Agreement. See Agreement Among Underwriters.

Quiet Period. Generally, the 25 day period after an IPO starts trading where the company (and insiders) can make no recommendations regarding the stock. After the 25-day Quiet Period, analysts typically begin coverage of the IPO.

Red Herring. The Preliminary Prospectus. Called "red herring" because of the red print identifying on its cover and because the information contained within might be "too good to be true."

Registered Company. Company that has filed a registration statement.

Registered Security. Issue registered with the Securities Exchange Commission.

Registration. Process enacted by the Securities Exchange Acts of 1933 and 1934 whereby all securities to be offered to the public are reviewed by the Securities Exchange Commission.

Registration Statement. The document disclosing the purpose of the IPO. See Registration.

Road Show. Presentation by an issuer of securities to potential buyers.

Secondary Distribution. Public sale of previously issued securities held by large investors.

Secondary Market. Where securities are bought and sold subsequent to original issue.

Secondary Offering. See Secondary Distribution.

Selected Dealer Agreement. Agreement among the selling group in an underwriting.

Selling Concession. Discount at which securities in a new issue are allocated to members of a selling group by the underwriters.

Selling Group. Group of dealers appointed by the syndicate manager to market a new issue or secondary offering to the public.

Spread. The difference between the proceeds an issuer receives and the price paid by the public for the issue.

Stabilization. Intervention in the market by a managing underwriter in order to keep the market price from falling below the public offering price.

Standby Commitment. Agreement between an issuer and the standby underwriter.

Standby Underwriter. The underwriter that contracts (for a fee) to purchase for resale any portion of a new issue that is not subscribed to during the two- to four-week standby period.

Sticky Deal. IPO that the underwriter feels will be difficult to sell.

Subscription. An agreement of intent to buy new issues.

Subscription Warrant. See Warrant.

Sweetener. See Kicker.

Syndicate. See Purchase Group.

Syndicate Contract. See Agreement Among Underwriters.

Syndicate Manager. See Managing Underwriter.

Takedown. Each investment bank's proportionate share of an IPO.

Tombstone. Advertisement placed in newspapers by investment bankers for an IPO.

Underbanked. When the managing underwriter is having difficulty getting other banks to become part of the underwriting group.

Underbooked. When the underwriters are receiving low numbers of indications of interest.

Underwrite. To assume the risk of buying a new issue and then resell them to the public.

Underwriters. The underwriting group.

Underwriter. Typically refers to the Managing Underwriter. Can also refer to the underwriting group.

Underwriting Agreement. Agreement between the issuer and the managing underwriter.

Underwriting Group. Temporary association of investment banks organized by the managing underwriter.

Underwriting Spread. See Spread.

Undigested Securities. Shares of a IPO that remain unsold to the public due to lack of interest.

Waiting Period. The time between the filing of the registration statement and when the shares can be first offered to the public.

Warrant. Entitles the holder to buy a proportionate amount of common stock at a specified price.