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The managing underwriter has set the POP for a new issue offering at $50 per share. After negotiating, the proceeds to be received by the issuer upon closing are set at $48 per share. The managing underwriter will retain a management fee of $.25 per share and the selling concession has been set at $.75 per share. The spread is: A $2.00 B $1.25 C $1.00 D $.25

Sagot :

Answer:

A $2.00

Explanation:

The computation of the spread is shown below;

Spread represent the gross compensation made to the underwriters. It shows the difference between the Public Offering Price and the amount per share that was collected by the issuer.

So, it should be

= $50 per share - $48 per share

= $2 per share

hence, the correct option is a.

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