Hedge Fund Glossary

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Underwriting Discount

the money the Underwriters make from a Securities offering. Underwriters make their money by selling the new Securities at a markup from what they paid. For example, the Underwriters might buy each share in an IPO from the Issuer for $16.50 and sell it into the market at the offering price of $20. Here, the Underwriting Discount (or Spread) is $3.50 per share.

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