As the size of a financing issue increases, the ________ usually decreases on a percentage basis.

Question

Quizplus · Accepted Answer

As the size of a financing issue increases, the flotation cost of the issue usually decreases on a percentage basis due to economies of scale. However, the cost of equity may or may not decrease depending on various factors such as market conditions and the riskiness of the project. The effective tax rate is not directly related to the size of the financing issue.

As the Size of a Financing Issue Increases, the ________