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1 FINANCE MCQS

The underwriter spread of stock is added to net proceeds to calculate ___________?

  • Overwriter spread
  • Gross proceeds
  • Participation proceeds
  • Non-participation proceeds
Correct Answer: B. Gross proceeds

Detailed Explanation

In securities issuance, net proceeds represent the amount of money the issuing company actually receives after deducting the underwriter’s fee. If you add the underwriter spread back to the net proceeds, you get the gross proceeds, which is the total amount raised from the sale of the securities before any deductions. Gross proceeds reflect the full value collected from investors, while net proceeds show the usable funds available to the company.

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