The costs involved with issuing common stock are much lower than the costs involved with issuing bonds and preferred stock.

Question

Quizplus · Accepted Answer

The costs involved with issuing common stock are typically higher than the costs involved with issuing bonds and preferred stock. This is because issuing common stock often involves hiring investment bankers and underwriters, as well as expenses related to drafting and distributing prospectuses and registering with the Securities and Exchange Commission. Additionally, issuing common stock can dilute the ownership stake of existing shareholders, which can lead to additional expenses related to investor relations and shareholder communication.

The Costs Involved with Issuing Common Stock Are Much Lower