Flotation Costs Are

question 99

Multiple Choice

Flotation costs are:

• A)insignificant and can be assumed away.
• B)the difference between the bid-ask spread on the sale of the security.
• C)commissions to the underwriting firm that floats the issue.
• D)None of these answers are correct.

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Definitions:

Market Value Method

The market value method is a valuation method used to assess the value of an asset based on its current market price.

Bond Conversion

The process of converting a convertible bond into a specific number of shares of the issuer's common stock.

Conversion Privilege

A feature of certain securities that allows the holder to convert them into a different type of security, typically common stock, under specific conditions.

Bonds Payable

A long-term liability account on a company's balance sheet, representing bonds that the company is obligated to repay at a specified future date.