With respect to the public offering of securities by an underwriting syndicate, which of the following is true?
A)the underwriting spread is greater than the selling concession
B)the reallowance is greater than the selling concession
C)the selling concession is greater than the underwriting spread
D)the reallowance is greater than the underwriting spread

Question

Quizplus · Accepted Answer

the underwriting spread is greater than the selling concession. The underwriting spread (or "gross spread") is the difference between the price paid to the issuer and the public offering price. The selling concession is the amount that the managing underwriter gives to dealers in the selling group. The reallowance is the amount that underwriters give to other dealers and is less than the selling concession.

With Respect to the Public Offering of Securities by an Underwriting