Devolvement

Dictionary Says

Definition of 'Devolvement'

When the undersubscription of a security issue forces the underwriting investment bank to purchase unsold securities during an offering. Devolvement is often an indication that the market currently has negative sentiments toward the issue. This negative sentiment can have a significant impact on subsequent demand.
Investopedia Says

Investopedia explains 'Devolvement'

Devolvement poses substantial risk for the underwriting investment bank. When it is required to purchase unsubscribed shares of an issue, it will often purchase the stock at a higher-than-market-value price. Because demand is lower than anticipated, there are few buyers for the security at its issued value. Typically, the investment bank will not hold onto the floundering issue for too long and will usually liquidate the shares in the market, often causing a financial loss.

Sign Up For Term of the Day!

Try Our Stock Simulator!

Test your trading skills!

Related Definitions

  1. Underwriting

    1. The process ...
  2. Initial Public Offering - IPO

    The first sale ...
  3. Undersubscribed

    A situation in ...
  4. Unsubscribed

    Newly issued ...
  5. Investment Bank - IB

    A financial ...
  6. Gross Spread

    The difference ...
  7. Market Out Clause

    A stipulation in ...
  8. Piggy Back Registration

    When an ...
  9. Absorbed

    1. In a general ...
  10. Trading Floor

    The floor where ...

Articles Of Interest

  1. IPO Basics Tutorial

    What's an IPO, and how did everybody get so rich off them during the dotcom boom? We give you the scoop.
  2. 5 Tips For Investing In IPOs

    Thinking of investing in IPOs? Here are five things to remember before jumping into these murky waters.
  3. How To Interpret A Company's Prospectus

    Learn to decipher the secret language of the prospectus - it can tell you a lot about a company's future.
  4. A Look At Primary And Secondary Markets

    Knowing how the primary and secondary markets work is key to understanding how stocks trade.
  5. Small Caps Boast Big Advantages

    Find out why little companies have the greatest potential for growth.
  6. Becoming A Financial Analyst

    A career as a financial analyst requires preparation and hard work, but the payoff can be especially rewarding.
  7. Wanna Be A Bigwig? Try Investment Banking

    A career in this high-stress field can be very rewarding for the right person. Find out if you have what it takes.
  8. How To Evaluate A Micro-Cap Company

    Learn how to think big by investing in smaller stocks.
  9. A Primer On Preferred Stocks

    Offering both income and relative security, these uncommon shares may work for you.
  10. Research Report Red Flags For Brokers

    Discover how to look past analysts' ratings to find winning stocks for your clients.

comments powered by Disqus
Recommended
Loading, please wait...
Trading Center