Flotation Costs Are

question 123

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 is correct.

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Definitions:

Novation Clause

A legal provision that allows an original contract to be replaced with a new contract, wherein a new party takes on the obligations of one of the original parties.

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Employees who perform a variety of administrative and clerical tasks to support the operations of an office.

Organizational Meeting

The initial meeting held by the incorporators or directors of a new corporation to complete the formation of the corporation and to establish its internal affairs.

Incorporation Process

The series of steps required to legally create a corporation, including the filing of articles of incorporation with the relevant state authority and compliance with regulatory requirements.