In Comparison to Debt Issuance Expenses the Total Direct Costs

question 12

Multiple Choice

In comparison to debt issuance expenses the total direct costs of equity issues are:

• A) considerably less because the equity market is more liquid than the debt market.
• B) about the same once cost are amortized over the life of the instrument.
• C) meaningless because debt can not have any indirect costs like equity can.
• D) considerably greater because of the risk of market movement and price change is greater.

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Definitions:

Mean Absolute Percent Error

A measure of prediction accuracy in statistics, representing the average of the absolute percentages of errors between predicted and observed values.

Strategic And Planning Decisions

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Predictions about the quantity of products a company needs to produce in future periods based on expected demand.

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