When investment banking firms buy newly issued securities from firms and then expect to resell them...

When investment banking firms buy newly issued securities from firms and then expect to resell them in the market for a higher price, the difference in price is commonly called the

Group of answer choices

underwriting spread.

competitive bid.

best effort profit.

issuing fee.

Solutions

Expert Solution

Answer = Underwriting Spread

The underwriting spread is the difference between the amount paid by the underwriting group in a new issue of securities and the price at which securities are offered for sale to the public. It is the underwriter's gross profit margin, usually expressed in points per unit of sale (bond or stock).

jeff jeffy answered 2 years ago

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