The cost of a security to a company may differ from the security's yield in the capital markets due to:
I.Flotation costs
II.Agency costs
III.Taxes
A)I only
B)I and II only
C)I and III only
D)I and II and III

Question

Quizplus · Accepted Answer

Flotation costs and taxes can both affect the cost of a security for a company, while agency costs are related to corporate governance and not directly related to the cost of capital. Therefore, choices I and III are the most appropriate.

The Cost of a Security to a Company May Differ