A study by Lee, Lockhead, Ritter, and Zhao that examined the underwriting discount and other direct costs of going public with a debt or equity offering, found:

Question

Quizplus · Accepted Answer

The study found that the direct expenses of going public are higher for equity offerings than for debt offerings (A), but there are substantial economies of scale (B). Additionally, the study found that the magnitude of underpricing is, on average, similar to the total direct expenses (C). Therefore, all of these options are correct (D).

A Study by Lee, Lockhead, Ritter, and Zhao That Examined