Generally, the larger the dollar value of an issue, the smaller is the spread as a percentage of the offering price.

Question

Quizplus · Accepted Answer

This statement is generally true. The larger the dollar value of an issue (i.e. the total amount of securities being offered), the more attractive it is to potential buyers, leading to greater demand and a smaller spread as a percentage of the offering price. However, there may be other factors that affect the spread, such as market conditions and the level of competition among underwriters.

Generally, the Larger the Dollar Value of an Issue, the Smaller