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.

---

Definitions:

Sensitivity Analysis

A method for assessing the effects of varying independent variable values on a specific dependent variable, based on certain assumptions.

Discount Rate

The interest rate used to discount future cash flows to their present value, reflecting the opportunity cost of capital.

Tax Credit

An amount that taxpayers can subtract directly from taxes owed to their government.

Forecast Error

Forecast error is the difference between the actual value and the predicted value in a forecast, indicating the accuracy of forecasting models.