The Six Components That Make Up the Total Costs of New

question 30

Multiple Choice

The six components that make up the total costs of new issues are:

• A)the spread; other direct expenses such as filing fees; indirect expenses such as management time; economies of scale; abnormal returns and the Green Shoe option.
• B)the discount; other direct expenses such as filing fees; indirect expenses such as management time; due diligence costs; abnormal returns and the Green Shoe option.
• C)the spread; other direct expenses such as filing fees; indirect expenses such as management time; abnormal returns; underpricing and the Green Shoe option.
• D)the spread; other direct expenses such as filing fees; economies of scale; due diligence costs; abnormal returns and underpricing.
• E)None of the above.

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Definitions:

Regression Analysis

A statistical method for estimating the relationships among variables, often to forecast future trends.

Regression Analysis

A statistical process for estimating the relationships among variables, often to determine the effect of one or more independent variables on a dependent variable.

Least Squares Line

A line of best fit determined by minimizing the sum of squares of the differences between observed and predicted values in regression analysis.

Weight

A measure of the heaviness or mass of an object or individual.