The term "freed up" refers to a specific point in the underwriting process where underwriters are no longer required to sell securities at a predetermined price. Once they are freed up, they can trade any unsold securities at the current market price. This situation allows investors to access capital that was previously tied up in these securities, enabling them to invest in other assets.
"Freed up" is primarily used in the context of finance and securities law. It is relevant during the underwriting process in capital markets, where securities are issued and sold. Understanding this term is important for investors and financial professionals who engage with securities and investment strategies. Users may find it beneficial to utilize legal forms and templates from US Legal Forms to navigate related processes effectively.
Here are a couple of examples of abatement:
For instance, if an underwriter has sold 80% of a security offering and the remaining 20% is freed up, the underwriter can now sell that 20% at the current market price rather than the agreed price. This allows the underwriter to manage their portfolio more flexibly.
(Hypothetical example) An investor who initially invested $10,000 in a security that is now valued at $12,000 may decide to close their position. Once the position is closed, the $12,000 is considered freed up capital, which the investor can use to purchase other assets.
| Term | Definition | Key Differences |
|---|---|---|
| Freed Up | Capital available after closing a position in securities. | Focuses on underwriter obligations and capital access. |
| Liquidation | Process of selling off assets to convert them to cash. | Broader term that includes selling any asset, not just securities. |
| Market Price | The current price at which securities are bought and sold. | Refers specifically to the trading price, not the availability of capital. |
If you find yourself in a situation where your capital is freed up, consider reviewing your investment strategy. You may want to explore various asset classes to maximize your returns. For assistance, US Legal Forms offers templates that can help you manage your investments and legal requirements effectively. If your situation is complex, seeking advice from a financial advisor or legal professional is recommended.
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It means that the capital previously tied up in a security can now be accessed and used for other investments.