Which of the following is FALSE about IPO underwriters? A) They are often large investment banks...
- Which of the following is FALSE about IPO underwriters?
A) They are often large investment banks
B) They earn money by charging a spread on the equity sold meaning they buy it at a lower price from company and sell it to interested investors at a higher price
C) A typical spread for IPO is about 7%
D) They normally do not charge a spread for SEOs
Homework Answers
The statement D is FALSE
IPO underwriters, the investment banks, do charge a spread for Seasoned Equity Offerings (SEOs).
The following are correct statements:
- They are often large investment banks
- They earn money by charging a spread on the equity sold meaning they buy it at a lower price from the company and sell it to interested investors at a higher price
- A typical spread for IPO is about 7%
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