Simple English definitions for legal terms
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Underwriting spread: The difference between the price that a company gets for selling its stocks or bonds to an underwriter and the price that the public pays for those same stocks or bonds. The underwriting spread is made up of different fees that the underwriter charges for its services. This spread compensates the underwriter for taking on the risk of buying the securities from the company and selling them to the public.
An underwriting spread is the difference between the price that an underwriter pays to the issuer of a security and the price paid by the public in the initial offering. This spread compensates the underwriter for its services and is made up of the manager's fee, the underwriter's discount, and the selling-group concession or discount.
These examples illustrate how the underwriting spread works in investment banking. The underwriter takes on the risk of buying the securities from the issuer and then selling them to the public. The underwriting spread compensates the underwriter for this risk and for the services provided in bringing the securities to market.