As the Size of a Financing Issue Increases, the ________

question 28

Multiple Choice

As the size of a financing issue increases, the ________ usually decreases on a percentage basis.

• A) cost of equity
• B) flotation cost of the issue
• C) effective tax rate
• D) both A and B

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Definitions:

Ford

An American multinational automaker founded by Henry Ford, known for mass-producing affordable vehicles and pioneering assembly line production techniques.

General Motors

An American multinational corporation headquartered in Detroit that designs, manufactures, markets, and distributes vehicles and vehicle parts.

Greenmail

A situation where a company pays a premium to buy back its own stock from a shareholder to avert a takeover attempt.

Takeover Attempt

An effort by one company to acquire control of another company, often through the purchase of a majority of its stock.