Question

10. The difference between the price an underwriter pays an issuer and the underwriter's offering price...

10.
The difference between the price an underwriter pays an issuer and the underwriter's offering price is called the:
A.
spread.
B.
margin.
C.
offer differential.
D.
firm commitment.
E.
underwriting capital.
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Answer #1

The difference between the price an underwriter pays an issuer and the underwriter's offering price is called the spread.

An underwriting spread is the spread between the dollar amount that underwriters, such as investment banks, pay an issuing company for its securities and the dollar amount that underwriters receive from selling the securities in the public offering. The underwriting spread is essentially the investment bank's gross profit margin, typically disclosed as a percentage or else in points-per-unit-of-sale. So, the answer be the option A. Which is spread.

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