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Penalty Bid: In efforts to discourage investors from selling their IPO shares immediately after the offering, some brokers will impose a penalty for "flipping" the stock. It is important for an investor to know if there a penalty for selling and what the time restrictions are before making the decision to buy an IPO. WRH+Co does not impose penalty bids.

Penny Stocks: Low priced stocks trading in the over-the-counter market. Typically refers to shares trading below one dollar a share.

Postponed: If an IPO doesn't attract sufficient buyers to be considered successful by the issuers, it may be postponed until market conditions seem more favorable.

Preliminary Prospectus: The first offering document printed by the company with some of the details of an IPO. The price range and number of shares to be issued is usually included in the preliminary prospectus but the terms may be changed before the final prospectus is distributed. Some lettering on the front cover is printed in red so many people refer to it as the "red herring." During presentations to potential investors, company representatives are limited to discussing only information that is contained in the current prospectus.

Premium: The amount paid by the buyer of an option to the seller for the right to call or put the underlying security for a fixed period of time.

Previous Day's Close: The previous day's last reported trade.

Price Range: At the filing for an IPO with the Securities and Exchange Commission (SEC), companies will generally state a range that they except the IPO to price at. The range is often within $2 or $3 and may be changed at any time before the IPO is finalized. If there is high interest in the IPO the issuer may adjust the range upwards to maximize the monies raised in the IPO.

Principal: When a brokerage firm sells securities from their own inventory for a markup they are acting as a principal.

Proceeds: The amount of money that a company raises in the IPO is called the proceeds. In the prospectus there is a section called "Use of Proceeds" which describes how the company intends to spend the money raised. An investor should decide if the use of the proceeds will be beneficial to the future growth of the company before making the investment.

Put: An option contract under which the holder (buyer) has the right to sell the number of shares of the underlying security that is covered by the contract at a fixed price for a fixed period of time. The put option buyer pays the put option seller (writer) a fee called a premium. It also obligates the seller, if the buyer exercises, to purchase the underlying security that is covered by the contract at a fixed price for a fixed period of time.