Definition of Seasoned Security

Seasoned Security is a financial instrument that has been trading publicly for a long period of time in the secondary market. Its price shows fluctuations in the initial period. With the passage of time the short-term effects settle down and the price becomes stable.

Explanation

The most commonly known example is that if euro market security becomes a seasoned security after it has been actively trading for a period of 40 days. When an initial public offering (IPO) is launch, its price shows significant volatility immediately following their listing. As the securities spend time in the market their short-term effects settle down and prices become stable.