Dutch auction

Definition

Dutch auction, also known as descending price auction, uses a bidding process to find an optimal market price for the stock, the highest price at which an issuing company can sell all the available shares. An alternative to the traditional negotiated pricing process used by underwriters to set IPO prices, it was most recently employed by Google and is used for US Treasury auctions. Named after the famous auctions of Dutch tulip bulbs in the 17th century, it is based on a pricing system devised by Nobel prize winning economist William Vickrey.

Use Dutch auction in a sentence

The dutch auction was used to sell the securities as we had determined it was the best way to obtain the highest price.

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I heard about the dutch auction and I did not want any part of it, because it bored me to tears and made me feel awkward.

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Fuku Holdings, Inc conducted a Dutch auction to price their shares as it was cheaper than using underwriters to negotiate a price.

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Dutch Auction Preferred Stock auction rate