1 how do you explain why the underwriting spread on ipos, Ask an Expert

Finance

1. How do you explain why the underwriting spread on IPOs averages about 7 percent of the offering price, whereas the underwriting spread on a seasoned offering of common stock averages less than 5 percent?

2. Discuss the various issues that must be considered in selecting an investment banker for an IPO. Which type of placement is usually preferred by the issuing firm?

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