The larger the dollar value of an underwriting, the smaller is the underwriting discount as a percentage of the offer price.

Question

The larger the dollar value of an underwriting, the smaller is the underwriting discount as a percentage of the offer price.​

Quizplus · Accepted Answer

This statement is true. Underwriters typically charge a higher percentage fee for smaller underwritings to compensate for the fixed costs associated with underwriting services. As the dollar value of the underwriting increases, the underwriting fee as a percentage of the offer price decreases as the fixed costs are spread over a larger dollar amount.

The Larger the Dollar Value of an Underwriting, the Smaller