Business and Personal Finance Dictionary

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• STUB STOCK
  
  When a company has a negative net worth as a result of being bought out or going bankrupt, it may convert some of the bonds it has issued into shares of common stock. Perhaps because each share is worth only a portion of the original bonds value, this new stock is known as stub stock. The issuing companys financial instability makes stub stock a volatile investment. But if the company regains its strength, stub stock can increase dramatically in value.
  
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