The Total Direct Costs of Underwriting an Equity IPO

question 18

Multiple Choice

The total direct costs of underwriting an equity IPO:

• A)tends to increase on a percentage basis as the proceeds of the IPO increase.
• B)is generally between 7 and 8 percent, regardless of the issue size.
• C)can be as high as 25 percent for small issues.
• D)excludes the gross spread.
• E)excludes both the gross spread and the underpricing cost.

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Definitions:

Supraorbital Ridges

Bony ridges located above the eye sockets of many vertebrates, which can serve as sites for muscle attachment and protection for the eyes.

Supraorbital Ridge

The prominent bony ridge above the eye socket; ape skulls have prominent supraorbital ridges.

Paranthropus Boisei

An extinct hominin species known for its robust cranial features, large molars, and diet primarily consisting of hard plant material.

Prehensile Tail

Tail adapted for grasping.