In Comparison to Debt Issuance Expenses, the Total Direct Costs

question 27

Multiple Choice

In comparison to debt issuance expenses, the total direct costs of equity issues are:

• A) considerably less because the equity market is more liquid than the debt market.
• B) about the same once cost are amortized over the life of the instrument.
• C) meaningless because debt cannot have any indirect costs like equity.
• D) considerably greater because of the risk of market movement and price change is greater.

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