ShmoopTube

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finance a la shmoop what is when issued all right well it's a trading condition [Definition of when-issued]

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that applies to spin-offs or other structural changes in companies such

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that a new thing or entity is created which will have its own separate set of

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trading parameters and rules and elements and yeah okay well this one's [Woman looking confused]

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just easier with an example

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shmoop enterprises global or shmeg creators of the finest hand cream soap [Bottle of Shmeg hand cream is taken off a shelf]

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jokes on the planet decides to spin off its European business as a separate

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company based in Paris we like the food and the tiny dogs and the arrogance and [Woman sat with a dog on her lap at a picnic table with a plate of food]

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the armpit hair so we here at shmoop central declare that all shareholders of

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SHM egg will get 0.35 shares of shmoo or a new company to be spun off of the [Shmeur stock being given to to Shmeg]

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parent that new company will sell the same products as sh meg make them the

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same way albeit with more european union labor and sell them only in Europe and [Guy working in a warehouse wearing a beret]

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we mumbled that this notion makes sense because Europe is so protectionist

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against them damn foreigners like us trying to sell anything into the [Definition of protectionist]

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continent yeah they make us hire their labor first we're gonna sell stuff to

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them and it's hard to sell anything into the continent and while we really try [Woman begging European businessmen]

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hard to be incontinent ok the spin-off of shmore from Shmeg will officially [Newspaper article about the spinoff]

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happen on May 4th our favorite day of the year and no it's not Bastille Day

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but this security which will actually be trading on May 4th will begin trading on [May 4th highlighted on a calendar]

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February 2nd as quote when issued unquote well why are securities kind of

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traded here before they are actually traded like when issued is a kind of [3 zombies in front of a burnt down city]

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zombie apocalypse derivative of an actual security being traded so like why

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do it well in large part because when spin-offs like this happen there is an

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unproven market with ambiguous market demand and appetite for those securities

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maybe the Europeans are still angry we didn't enter the big one sooner and help [List of grudges against the US]

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save them from the Nazis maybe they don't like Jack's secret sauce well [Pot of sauce appears next to a burger]

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maybe just don't like our president and like

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who doesn't like Oprah so what are they thinking anyway well but whatever the [Oprah giving a speech]

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ability to kind of sort of test the market in the form of a when issued

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security is a dandy ingredient to smooth friction sometimes a trust at big local [Pan of vegetables with when-issued stock]

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partners might be brought in to commit to buying say 10 percent of a given when

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issued security at a set price to hopefully stabilize a very uncertain [The big local partner looks excited]

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market place and make it certain that when issued transactions that won't [Shmeg stock chart going up and down]

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crater the parent company stock when it then comes time to actually begin

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trading in February as when issued well the people who really want shmore can't [Big line of people]

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rush to the head of the line so may the shmore be with you

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