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Hot Issue Meaning & Definition

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Definition of Hot Issue

Hot issue is a new issue of securities which trades at an immediate premium to its offering price in the secondary market.

Applying "Hot Issue" to Securities Exams:

When a new issue of common stock is being sold to investors during an IPO is in high demand its price may increase dramatically in the secondary market. A hot issue is one that trades at an immediate premium to its offering price on the first day of trading in the marketplace. The higher the demand for the issue – the greater the premium or increase in price.

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