Chapter 7 of 8
What is the cut-off price?
IPO Label · · About 1 minute to read
A way of saying "whatever the final price turns out to be, I will pay it".
Most IPOs do not have one price. They have a range, with a lowest price and a highest price.
New word
Price band
The range an IPO is offered in. People apply somewhere inside it, and one final price is fixed afterwards.
- The lowest price
- The highest price
If you pick a price below the final one, your application is thrown out and you get nothing.
So most ordinary people tick cut-off. It means you accept whatever price is settled on, so your application always counts.
Remember
Money is held at the highest price in the band. If the final price is lower, the difference comes straight back to you.