How Does the Size of an Issue Affect the Fees

question 29

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.

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Definitions:

Affect

A term used in psychology to describe the experience of feeling or emotion.

Ambivalence

The state of having mixed feelings or contradictory ideas about something or someone.

False Sensory Perceptions

Experiences where individuals perceive things that are not present, often referred to as hallucinations in the context of psychiatric conditions.

Compulsions

Actions or thoughts that an individual is compelled to perform repeatedly, in response to overwhelming obsessions or based on strict rules that must be adhered to.