Capital MarketsQuestion 313 of 398
The underwriting spread in a securities offering is best defined as:
a.The difference between the coupon rate and the yield to maturity
b.The commission paid by investors to their broker
c.The difference between the price the public pays and the amount the issuer receives
d.The bid-ask spread on the stock in the secondary market
Explanation
The underwriting spread is the compensation to the underwriters, equal to the difference between the public offering price and the proceeds paid to the issuer. It is divided among the manager, syndicate members, and selling group as their respective concessions and fees.
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