The cost of issuing securities can be broken down into the following main categories:
-Gross spread (or underwriting discount)
-Other direct expenses – filing fees, legal fees, etc.
-Indirect expenses – opportunity costs, such as management time spent working on the issue
-Abnormal returns – seasoned stock issue, the reduction in price when the announcement is made
-Underpricing – IPOs
-Green Shoe option – additional allotment of shares sold at offer price