When a firm sells a new issue through an investment banker the costs incurred
A) are the "give up" expense of the spread plus the legal and accounting fees, printing expense and other small fees.
B) are the spread to the underwriter which includes all the costs of legal and accounting fees, printing expense and other small fees.
C) are dependent upon the number of underwriters in the syndicate.
D) a and c.

Question

Quizplus · Accepted Answer

When a firm sells a new issue through an investment banker, the costs incurred include the "give up" expense of the spread, which is the difference between the price paid by the underwriter and the offering price, as well as the legal and accounting fees, printing expense, and other small fees. The costs are not necessarily dependent upon the number of underwriters in the syndicate.

When a Firm Sells a New Issue Through an Investment