Because of their lower levels of risk to the underwriter, debt issuances have lower spread percentages than equity percentages, and smaller issuances have lower spread percentages than large issuances.
The smaller the issue, the higher the fees as a percentage of offering price; hence, the greater the spread.

Question

Quizplus · Accepted Answer

The statement is incorrect. Smaller issuances typically have higher spread percentages, not lower. This is because the fixed costs of underwriting and distributing the issuance are spread out over a smaller amount of capital raised, resulting in a higher percentage of fees.

Because of Their Lower Levels of Risk to the Underwriter