Minimizing per-dollar distribution costs favors issuing bonds __________ for issue sizes above approximately __________.
A) privately; $10,000,000
B) privately; $100,000,000
C) publicly; $10,000,000
D) publicly; $100,000,000

Question

Quizplus · Accepted Answer

Publicly issued bonds typically have lower per-dollar distribution costs compared to privately issued bonds, due to their wider investor base and ability to achieve economies of scale. This cost advantage becomes more significant for larger issue sizes, typically above $100,000,000. Therefore, issuing bonds publicly for issue sizes above approximately $100,000,000 would minimize per-dollar distribution costs.

Minimizing Per-Dollar Distribution Costs Favors Issuing Bonds __________ for Issue