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Cheap Stock

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Cheap Stock
The practice of issuing stock in a company at too low a price immediately before an IPO. Generally, the cheap stock is offered at only a small fraction of the company's expected share price after the IPO. An underwriter may offer cheap stock in order to attract investors who might make a quick profit from the company or to potential managers in the company. Offering cheap stock is illegal.


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For investors who are hunting for solutions in a sea of cheap stocks, they may be able to find solace and supplementary profits in the options market.
While this type of stock is not used very frequently, it allows companies to get cheap stock into the hands of key employees at minimal tax cost.
 
 
 
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