watered stock


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Watered stock

A stock representing ownership in a corporation that is worth less than the actual invested capital, resulting in problems of low liquidity, inadequate return on investment, and low market value.
Copyright © 2012, Campbell R. Harvey. All Rights Reserved.

Watered Stock

An overvalued stock. A stock may be overvalued for any number of reasons; speculation and over-issue are only two of the most common. Watered stocks are often subject to a price correction.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved

watered stock

Stock that is issued with a value considerably in excess of the value of the assets that support it. The term may be derived from the practice of feeding cattle salt to induce them to drink large amounts of water just before they are sold, thereby increasing their weight. Thus, the buyer—whether of stock or of livestock—pays for more than is actually received.
Wall Street Words: An A to Z Guide to Investment Terms for Today's Investor by David L. Scott. Copyright © 2003 by Houghton Mifflin Company. Published by Houghton Mifflin Company. All rights reserved. All rights reserved.