Book Building

Trading Basics

Book Building

When a new share is issued book building is the process institutions go through to gauge demand and therefore price.

This goes on before the share is available to trade on the exchange.

Other Trading Basics

Backwardation

Backwardation occurs when a bid price exceeds the ask price.

This usually occurs when stock is suspended or under a share repurchase scheme.

It can also mean that a futures contract will trade at a higher price when it is coming close to expiring.

The opposite of backwardation is known as contango.

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Annuity

A guaranteed income for the rest of someones life.

Historically purchased with pension lump sums.

The buyer is swaping cash now for future income.

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