What does the gross spread refer to in bond issuance?

The gross spread in bond issuance refers specifically to the difference between the price at which the underwriters buy the bonds from the issuer and the price at which they resell them to the public. This spread includes the total compensation that underwriters receive for their services in helping to issue the bonds. It is essentially a percentage of the total proceeds from the bond sale, calculated to cover the underwriters' fees, selling expenses, and other costs incurred during the issuance process. Understanding the gross spread is crucial for both issuers and investors, as it reflects the market dynamics and the overall cost of accessing capital through the bond market.

The other options do not focus on the specific role of underwriters in the bond process. The net profit from bond sales relates to overall financial outcomes rather than the specific mechanics of the gross spread. Fees charged for bond registration are separate administrative costs not included in the gross spread. Similarly, costs incurred by municipalities pertain to broader financial obligations and expenses beyond the underwriting process. Thus, the definition captured in the correct choice aligns with the customary understanding of what gross spread represents in the context of bond issuance.