Which of the Following Statements Is Generally True Concerning the Costs

question 17

Multiple Choice

Which of the following statements is generally true concerning the costs of security issue?

• A) Underpricing is rarely a significant cost.
• B) Equity is cheaper to issue than debt.
• C) Debt is cheaper to issue than equity.
• D) There are no economies of scale in security issuance.

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Definitions:

Usage of Trade

Established practices or methods of dealing regularly observed in a particular industry or trade.

Commercially Impracticable

A condition in contractual agreements indicating that fulfilling the contract has become excessively burdensome or impossible due to unforeseen events.

Perfect Tender Rule

A legal principle requiring the seller to deliver goods in accordance with the terms exactly as specified in the contract, without any deviation.

Commercial Impracticability

A legal doctrine under which a party may be released from a contract when events render performance commercially impracticable.