When a firm sells a new issue through an investment banker, the costs incurred
A) are the "give up" expense of the spread, plus the legal and accounting fees, printing expense, and other small fees.
B) are the spread to the underwriter, which includes all the costs of legal and accounting fees, printing expense, and other small fees.
C) are dependent upon the number of underwriters in the syndicate.
D) are the "give up" expense of the spread, plus the legal and accounting fees, printing expense, and other small fees, and are dependent upon the number of underwriters in the syndicate.

Question

Quizplus · Accepted Answer

The costs incurred when a firm sells a new issue through an investment banker include the "give up" expense of the spread, plus the legal and accounting fees, printing expense, and other small fees. These costs are not directly dependent on the number of underwriters in the syndicate, nor are all these costs included in the spread to the underwriter.

When a Firm Sells a New Issue Through an Investment