Publicly placed bonds do not typically involve flotation costs due to the availability of publicly placed funds,but privately placed debt typically does involve flotation costs because of the difficulty involved in raising private funds.

Question

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Publicly placed bonds are sold to the general public through investment banks, which charge a fee for their services. Privately placed bonds are sold to a small number of investors, and the issuer typically pays a fee to the placement agent.

Publicly Placed Bonds Do Not Typically Involve Flotation Costs Due