How Does the Size of an Issue Affect the Fees

question 25

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 total fees for large number of shares released is smaller than that 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:

Units of Measurement

Standardized quantities used to quantify and describe physical properties of objects or events, such as length, mass, or time.

Quantitative

Relates to, measuring, or measured by the quantity of something rather than its quality, usually referring to data or information that can be quantified.

Numeric Values

Quantitative data represented in number form, which can be used in calculations and statistical analyses.

Arithmetic Operations

Basic mathematical operations including addition, subtraction, multiplication, and division.