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What is oversubscription of shares?

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November 07, 2010 10:11AM

When demand for a particular share is more than its supply, it is said to be oversubscribed. Oversubscription leads to sky high cut-off prices of shares and often leads to non-allotment of shares. It is always good to get an idea of oversubscription beforehand and bid accordingly.

EG: If a person bids for 10 shares in retail category and the issue is oversubscribed 2 times, he wiill get only 5 shares.