How Does the Size of an Issue Affect the Fees

question 79

Multiple Choice

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

• A)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.
• B)Large issues generally have a similar spread to small issues and thus attract much greater fees.
• C)Large issues have a reduced spread,which means that the total fees are generally the same as for smaller issues.
• D)Large issues have substantially larger direct costs and,thus,must charge a larger spread in order to be profitable for the underwriter.
• E)Large issues involve a flat fee rather than a spread.

---

Definitions:

Milligram

A unit of mass equal to one thousandth of a gram, often used to measure medication or chemical substances.

Desensitized

A reduction in emotional responsiveness to a stimulus after repeated exposure to it, often leading to a decrease in intense emotional reactions.

Stimulation

The action of arousing interest, enthusiasm, or excitement in something.

Primary Taste Qualities

The basic categories into which all taste sensations can be grouped, traditionally sweet, sour, salty, bitter, and umami.