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Simple English definitions for legal terms
hot stock
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A quick definition of hot stock:
A hot stock is a type of security that is traded in the open market at a substantially higher price after an initial or secondary offering. It is a class or series of securities that are simultaneously offered for sale. Essentially, it is a stock that is in high demand and has a high trading volume.
A more thorough explanation:
Definition: A hot stock is a security that, after an initial or secondary offering, is traded in the open market at a substantially higher price.
Example: Company XYZ releases a new stock offering to the public. The stock is initially priced at $10 per share. However, due to high demand and positive news about the company, the stock price quickly rises to $20 per share. This increase in price makes the stock a hot stock.
This example illustrates how a hot stock is a security that experiences a significant increase in price after its initial offering. This increase in price is often due to high demand and positive news about the company, making the stock a popular choice among investors.