Which of the following relationships is true regarding the costs of issuing the following securities?

Question

Quizplus · Accepted Answer

Issuing common stock often involves higher costs due to underwriting fees, legal fees, and the dilution of existing shares, making it generally more expensive than issuing preferred stock or bonds. Preferred stock issuance costs are typically higher than bonds due to higher coupon rates and the need to make the stock attractive to investors, but lower than common stock due to less dilution and fewer legal complexities. Bonds are usually the cheapest to issue because they involve lower interest rates and are secured, making them less risky for investors.

Which of the Following Relationships Is True Regarding the Costs