How Does the Size of an Issue Affect the Fees

question 87

Multiple Choice

How does the size of an issue affect the fees charged by underwriters?

• A) Large issues generally have a similar spread to small issues and thus attract much greater fees.
• B) Large issues have a reduced spread, which means that the total fees are generally the same as for smaller issues.
• C) Large issues have substantially larger direct costs and, thus, must charge a larger spread in order to be profitable for the underwriter.
• D) Although large issues generally have a smaller spread, the large number of shares released means that the total fees are somewhat larger than for smaller issues.

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