What is ‘Narrow-Based Weighted Average’
An anti-dilution provision used to ensure that investors are not penalized when companies are undergoing additional financing or issuing new shares. A narrow-based weighted average takes into account only the total number of outstanding preferred shares for determining the new weighted average price for the old shares.
Explaining ‘Narrow-Based Weighted Average’
The new weighted average price is adjusted for the preferred shareholder, thus providing protection against dilution. The narrow-based method is the most favorable for investors, as it lowers the price of the preferred shares more than other methods.
Further Reading
- Trunk, head, and step characteristics during normal and narrow-based walking under deteriorated sensory conditions – www.tandfonline.com [PDF]
- A second-best evaluation of eight policy instruments to reduce carbon emissions – www.sciencedirect.com [PDF]
- Fiscal policy, conflict, and reconstruction in Burundi and Rwanda – www.econstor.eu [PDF]
- Understanding price-based antidilution protection: Five principles to apply when negotiating a down-round financing – heinonline.org [PDF]
- Anti-Dilution Provisions – heinonline.org [PDF]
- Tax system reform in India: Achievements and challenges ahead – www.sciencedirect.com [PDF]
