Gross spread

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Gross spread

The fraction of the gross proceeds of an underwritten securities offering that is paid as compensation to the underwriters of the offering.

Gross Spread

In a public offering, the difference between the price an underwriter pays an issuer and the price at which it sells the offering to the public. That is, an underwriter pays the issuer an agreed-upon price to purchase an issue, which it then attempts to place with investors. When it places the issue, it charges the investor a certain price like any other trade. The difference is known as the gross spread; it forms the bulk of an underwriting firm's profits. See also: Fully subscribed, Overbooked, Underbooked.

gross spread

The difference in the price that an investor pays for a new security issue and the price paid the issuer by the lead underwriter. The gross spread is a function of a number of variables including the size of the issue and the riskiness, or price volatility, of the security. Also called underwriting spread.

Gross spread.

In an initial public offering (IPO), the gross spread is the difference between what the underwriters pay the issuing company per share and the per share price that investors pay. It's usually about 7%.

For example, if a stock is to be offered to the public at $10 a share, the underwriters may pay the issuing company around $9.30 per share. With millions of shares being sold, the 70 cents per share adds up to millions of dollars for the investment bank.

References in periodicals archive ?
16, 2015 international FOB reference prices of $315/mt (Vietnam rice) and $344/mt (Thailand), the gross spreads secured by NFA (attributed to ocean freight, insurance, survey fees, etc.
This increase was primarily driven by improvement in gross spreads as a result of low cost of borrowings and continued low operating expenses.
Underwriting spreads are gross spreads defined as the difference between the offered amount and the proceeds to the issuer, expressed as the percentage of the offered amount (or issue size; Gande, Puri, and Saunders, 1999).
We find these firms pay lower gross spreads and go to market faster than the same type of firm that chooses the traditional registration procedure.
In 2004 and 2005, AEL is expected to continue to generate sustainable, controlled asset growth from its distribution channels while improving its profitability through improving gross spreads and maintaining expense discipline.
NABARD has a modest earnings profile, marked by low gross spreads, driven largely by lending at mandated rates and increased reliance on borrowings at market rates.
Shelf public straight debt issues have lower gross spreads, a larger market capitalization, and an older listing age than nonshelf public and 144A straight debt issues.
In 2004 and 2005, AEILIC is expected to continue to generate sustainable, controlled asset growth from its distribution channels while improving its profitability through improving gross spreads and maintaining expense discipline.
This was primarily driven by a sharp increase in its gross spreads because of its reduced borrowing costs and better control on operating expenses.
We examine underpricing, long-run returns, lockup periods, and gross spreads for penny stock IPOs over the 1990-1998 period.
Profitability, for 2004 and 2005, is expected to continue the strong momentum initiated in 2003 by increasing its gross spreads and low expenses as well as controlling its high growth; however, if interest rates increase rapidly, the financial leverage and future profitability would deteriorate.
On a univariate basis, foreign US IPOs are significantly less underpriced relative to domestic US IPOs, while gross spreads are approximately the same on average.