Early subscription discount

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The early subscription discount is a discount that is granted if an investor places an order to buy a security well in advance of the public sale of the security. This applies above all to the initial public offering (IPO) of newly founded stock corporations . This is intended to motivate the buyer to place a binding purchase order at an early stage . The advantage for the issuing institute is that the expected inflow of capital into the company , as well as the expected issue price of the security can be forecast more precisely. Since the issue price is only determined when the security is issued, early subscriber discounts, unlike other discounts, are usually given in absolute values ​​(e.g. € 0.50 per share).