The difference between the underwriters' cost of buying shares in a firm commitment and the offering price of those securities to the public is called the:
A) gross spread.
B) under price amount.
C) filing fee.
D) new issue premium.
E) offer price.

Question

Quizplus · Accepted Answer

The gross spread refers to the difference between the price at which underwriters buy shares from the issuer in a firm commitment offering and the price at which these shares are then sold to the public. It represents the compensation to the underwriters for their services and the risk they take in the transaction.

The Difference Between the Underwriters' Cost of Buying Shares in a Firm