Which of the following statements is most correct concerning flotation costs? A)

Question

Which of the following statements is most correct concerning flotation costs?
A) Flotation cost are generally higher for bonds rather than stocks because the dollar amounts involved are much higher, allowing for economies of scale
B) Flotation costs are higher for common stocks than for preferred stocks and bonds due to the higher level of risk associated with owning common stock
C) Flotation costs as a percentage of gross proceeds increase as the size of the security issue increases
D) Flotation costs are the same for common stock, preferred stock and bonds because they reflect mainly printing costs and legal fees

Explanation / Answer

Which of the following statements is most correct concerning flotation costs?
A) Flotation cost are generally higher for bonds rather than stocks because the dollar amounts involved are much higher, allowing for economies of scale
B) Flotation costs are higher for common stocks than for preferred stocks and bonds due to the higher level of risk associated with owning common stock -correct answer
C) Flotation costs as a percentage of gross proceeds increase as the size of the security issue increases
D) Flotation costs are the same for common stock, preferred stock and bonds because they reflect mainly printing costs and legal fees

Related Questions

Navigate

• Browse (All)
• Browse W
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.