The term "underpricing" describes the process of setting the spread between the participants of the investment dealer syndicate.

Question

Quizplus · Accepted Answer

The term "underpricing" actually refers to the practice of issuing new securities (such as stocks or bonds) at a price lower than what the market is willing to pay, resulting in missed profits for the issuing company. It is not related to setting the spread between the participants of the investment dealer syndicate.

The Term "Underpricing" Describes the Process of Setting the Spread