The three basic costs associated with issuing stock in an IPO are

Question

Quizplus · Accepted Answer

The three basic costs associated with issuing stock in an IPO are underwriting spread, out-of-pocket expenses, and underpricing. The underwriting spread is the difference between the price paid by the underwriter to the issuing company and the price at which the underwriter sells the shares to the public. Out-of-pocket expenses include legal and accounting fees, printing and filing costs, and other expenses related to the IPO. Underpricing is the difference between the offering price and the first-day closing price of the IPO shares, and represents a cost to the issuing company because it means the company did not receive the full market value for its shares. Therefore, option B is the correct answer.

The Three Basic Costs Associated with Issuing Stock in an IPO