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:

Fallacy

A flaw in rational process causing an argument to be invalid.

Authority

The power or right to give orders, make decisions, and enforce obedience.

Subjectivism

The philosophical stance that knowledge and reality are subject to individual interpretation or perception.

Fallacy

An erroneous argument dependent upon an unsound or illogical contention.