Watered Stock

The stock that is issued at a relatively higher price than the actual value of the issuing party’s assets is watered stock. It is often referred to as overvalued stock, as they are deemed to be artificially inflated in value. This is often a part of a scheme to deceive investors and is difficult to sell. There are two main reasons for the book value of assets to be overvalued- excessive issuance of stock via a program or inflated accounting values.