ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -The term spinning refers to the act of offering preferred customers shares in an initial public offering (IPO) by a brokerage firm or underwriter in order to keep or obtain their business.

Detailed explanation-2: -What Is a Hot Issue? In finance, the term “hot issue” is used to describe an upcoming initial public offering (IPO) that is particularly popular among the investing public. Hot issues are typically oversubscribed by investors, meaning that their demand outstrips their supply.

Detailed explanation-3: -Introduction. No guarantee of getting the shares. Getting less than the offered rate. There are a number of variables that determine the profitability of investment. External influences can affect the price. Money gets locked for some time.

Detailed explanation-4: -You may not be allotted shares. The shares may be overvalued. The listing day can be highly volatile. You may not have sufficient information about the company.