If the spread on a new bond issue is $10 per bond and the takedown is $8, what is the price members of the selling group will pay for the bond?

To determine the price that members of the selling group will pay for the bond, we need to understand the concepts of spread and takedown. The spread is the difference between the price that the issuer receives for the bond and the price at which the bonds are sold to the public. In this case, the spread is $10.

The takedown is the portion of the spread that the selling group members receive when they distribute the bonds. Here, the takedown is $8. Therefore, the members of the selling group will effectively pay the issuer's price minus the takedown to acquire the bonds.

To calculate the price the selling group members will pay for the bond, you take the spread of $10 and subtract the takedown of $8. Thus, the price members of the selling group will pay is $2.

For the provided answer options, if we proceed with this logic, we realize that $10 (the spread) cannot be the price they pay since that represents the full spread. The $8 and $5 options do not align with the calculation derived from the relationship between the spread and the takedown. That leaves us with the conclusion that the price is likely derived from further understanding of the pricing mechanics