The Flotation Cost for a Firm Is Computed As

question 66

Multiple Choice

The flotation cost for a firm is computed as:

• A)the arithmetic average of the flotation costs of both debt and equity.
• B)the weighted average of the flotation costs associated with each form of financing.
• C)the geometric average of the flotation costs associated with each form of financing.
• D)one-half of the flotation cost of debt plus one-half of the flotation cost of equity.
• E)a weighted average based on the book values of the firm's debt and equity.

---

Definitions:

Dependent Variable

The variable in an experiment that is expected to change in response to manipulations of the independent variable.

Correlation Coefficient

A statistical measure that calculates the strength and direction of a linear relationship between two variables, ranging from -1 to 1.

Independent Variable

A variable in an experiment or model that is manipulated or changed to observe its effect on a dependent variable.

Dependent Variable

The variable in an experiment or study that is affected by changes in the independent variable.