A company may raise funds at a lower cost than otherwise would be the case if:

Question

Quizplus · Accepted Answer

By designing a security that addresses the disequilibrium between investor demand and supply, the company can make the security more attractive to investors, and thereby lower the cost of raising funds. This is because the demand for the security will be higher, allowing the company to sell the security at a lower interest rate or yield. The other options do not necessarily result in a lower cost of capital for the company.

A Company May Raise Funds at a Lower Cost Than