When a firm sells a new issue through an investment dealer 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 that 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) two of the other answers are correct

Question

Quizplus · Accepted Answer

The costs incurred when a firm sells a new issue through an investment dealer include the "give up" expense of the spread plus the legal and accounting fees, printing expense, and other small fees. Option B is incorrect because the spread only covers the underwriter's compensation and does not include all other expenses. Option C is also incorrect as the costs do not depend upon the number of underwriters in the syndicate.

When a Firm Sells a New Issue Through an Investment