Which of the following statements is generally true concerning the costs of security issue?

Question

Quizplus · Accepted Answer

Generally, debt is cheaper to issue than equity due to the tax-deductibility of interest payments on debt. Underpricing, or selling securities at a lower price than their actual value, can be a significant cost in terms of lost potential profits. There may be some economies of scale in security issuance, such as lower per-unit costs for large offerings, but this varies depending on the specific circumstances. The statement about equity being cheaper to issue than debt is false.

Which of the Following Statements Is Generally True Concerning the Costs