If flotation costs go down, the cost of new preferred stock will
A) go up.
B) go down.
C) stay the same.
D) slowly increase.

Question

Quizplus · Accepted Answer

If flotation costs go down, the cost of new preferred stock will go down as well. This is because flotation costs are the fees associated with raising capital, and if these costs decrease, the overall cost of raising capital decreases, which in turn leads to a decrease in the cost of new preferred stock.

If Flotation Costs Go Down, the Cost of New Preferred