A company is going public with an offering price of $10 per share. The gross spread is 7 percent. How much will the bank receive? How much will the issuing firm receive?

Question

Quizplus · Accepted Answer

The gross spread is the difference between the offering price and the amount the issuing firm receives per share. In this case, the gross spread is $0.70 per share (7 percent of $10). Therefore, the bank will receive $0.70 per share and the issuing firm will receive $9.30 per share ($10 - $0.70).

A Company Is Going Public with an Offering Price of $10