Which One of the Following Statements Is Generally True Concerning

question 15

Multiple Choice

Which one of the following statements is generally true concerning the costs of issuing securities?

• A) Underpricing is rarely a significant cost.
• B) Legal and other administrative costs generally average less than $1 million.
• C) Debt is cheaper to issue than equity.
• D) There are no economies of scale in security issuance.

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Definitions:

Variable Costs

Costs that vary directly with the level of production or output, such as raw materials and direct labor costs.

Net Income

The total profit of a company after all expenses, including taxes and operating costs, have been deducted from revenues.

Variable Costs

Expenses that change in proportion to the production or sales figures, like direct labor and raw materials.

Break-Even Point

The level of activity or sales volume at which total revenues equal total costs, resulting in no net loss or gain.