Issue Costs for Equity Are Higher Than Those for Debt

question 107

Multiple Choice

Issue costs for equity are higher than those for debt for all of the following reasons except:

• A) equity issues have higher administrative costs.
• B) underwriting stock is riskier than underwriting bonds.
• C) equity issues involve significantly more time to sell.
• D) equity issues have lower economies of scale.

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Definitions:

Vestibulocochlear

Relates to the vestibulocochlear nerve, the eighth cranial nerve, responsible for hearing and balance.

Equilibrium

The state in which all acting influences are balanced in a physical system or in a chemical reaction, leading to stability.

Vestibulocochlear Nerve

The eighth cranial nerve responsible for transmitting sound and balance information from the inner ear to the brain.

Accessory Nerve

A cranial nerve that supplies motor functions to some muscles in the neck and shoulder.