The Out-Of-Pocket Cost to Issue New Common Stock Is Always

question 61

True/False

The out-of-pocket cost to issue new common stock is always paid by the investment banker.
These costs are ultimately borne by the issuer.

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Definitions:

Conversion Price

The predetermined price at which convertible security, such as a bond or preferred stock, can be converted into a specified number of shares of common stock.

Common Stock

A form of corporate equity ownership, a type of security that represents ownership in a corporation and a claim on part of the company’s profits.

Exercise Price

The specified price at which the holder of an option can buy (in the case of a call option) or sell (in the case of a put option) the underlying security or commodity.

Warrant

A financial instrument that gives the holder the right, but not the obligation, to buy a company's stock at a predetermined price before a specified date.