The three basic costs associated with issuing shares in an IPO are:

Question

Quizplus · Accepted Answer

The three basic costs associated with issuing shares in an IPO are the underwriting spread, out-of-pocket expenses, and underpricing. The underwriting spread refers to the difference between the price paid by the underwriters to the issuing company for the shares and the price at which the shares are sold to the public. Out-of-pocket expenses include legal and accounting fees, printing and mailing costs, and other administrative expenses. Underpricing refers to the practice of setting the IPO price below the market price, which can result in lost potential revenue for the issuing company. Therefore, B is the best choice as it includes all three basic costs associated with issuing shares in an IPO.

The Three Basic Costs Associated with Issuing Shares in an IPO