Which one of the following statements is generally true concerning the costs of issuing securities?

Question

Quizplus · Accepted Answer

Debt is generally cheaper to issue than equity since debt is a lower risk to investors and therefore has a lower cost of capital. Underpricing can be a significant cost as it results in the issuer receiving less money than they otherwise could. Legal and other administrative costs can vary greatly but generally average around $1 million. There may be some economies of scale in security issuance, as larger issues may have lower fixed costs per unit.

Which One of the Following Statements Is Generally True Concerning