As the Size of a Financing Issue Increases, the [Blank]

question 42

Multiple Choice

As the size of a financing issue increases, the [blank] 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:

Voting Stock

Shares that give the shareholder voting rights in the corporation's matters, typically related to the election of the board of directors.

Unrealized Gain or Loss

The increase or decrease in the value of an investment that has not yet been sold and turned into cash.

Equity Section

The portion of a company’s balance sheet that represents the owners' or shareholders' interest in the company.

Equity Method Investments

Accounting technique used by a company to record its investment in another company when it has significant influence but does not have a majority control.