Series 79 practice questionmediumUnderwriting Agreements
Which component of the underwriting spread is paid to broker-dealers who sell shares to their retail clients but are not members of the underwriting syndicate?
- AThe management fee
- BThe underwriting fee
- CThe reallowance✓ Correct answer
- DThe structuring fee
Explanation
Why C — The reallowance
A non-syndicate dealer receives a reallowance, which is a portion of the selling concession.
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