What is Cutt-off price? What is the Difference between Floor Price and Cut-Off Price for a Book Building Issue?
Jainam Broking Limited
Last Update 2 jaar geleden
The book-building method refers to the offering of shares with a price range. In this strategy, the corporation sets a price range for the shares rather than a specific price, such as Rs. 80-100. The final price is set based on the supply and demand for the shares. The floor price is the lowest price, which is Rs 80, and the cap price is the highest price, which is Rs 100. The cut-off price is the price at which shares are allocated.
If the cut-off price is set at Rs 90, for instance, those who bid at Rs 80 will have to pay Rs 10 per share, while those who bid at Rs 100 will receive a refund of Rs 10 per share.
The shares are allocated when each investor pays the real issue price.