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:

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A condition where a female is carrying a developing embryo or fetus within her uterus.

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Two offspring produced by the same pregnancy, which can be identical (monozygotic) or fraternal (dizygotic).

DNA

Deoxyribonucleic acid, a molecule that carries the genetic instructions used in the growth, development, functioning, and reproduction of all known living organisms and many viruses.