The difference between the issuing price of a debt or equity issue and the net proceeds of the issue received by the issuing firm is known as the _____.

Question

Quizplus · Accepted Answer

The underwriter's spread is the difference between the price at which the underwriter purchases the securities from the issuing firm (issuing price) and the price at which the underwriter sells the securities to investors (offering price). This spread compensates the underwriter for the risk of purchasing and reselling the securities and for their services in managing the issuance process.

The Difference Between the Issuing Price of a Debt or Equity