The difference between what the investment bank gets from selling securities to public investors and what they pay to the issuing firm is known as:

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The difference between what the investment bank gets from selling securities to public investors and what they pay to the issuing firm is known as the underwriting spread. It represents the compensation that the investment bank receives for taking on the risk of underwriting and selling the securities. IPO underpricing refers to the situation where the offering price of the securities is lower than the price at which they start trading in the secondary market. A firm commitment and best efforts are types of underwriting agreements that describe the level of risk and responsibility assumed by the investment bank in the underwriting process.

The Difference Between What the Investment Bank Gets from Selling