Which of the following statements is MOST correct concerning flotation costs?
A) Flotation costs are the same for common stock, preferred stock and bonds because they reflect
mainly printing costs and legal fees.
B) Flotation costs are higher for common stocks than for preferred stocks and bonds due to the
higher level of risk associated with owning common stock.
C) Flotation costs are generally higher for bonds rather than stocks because the dollar amounts
involved are much higher, allowing for economies of scale.
D) Flotation costs as a percentage of gross proceeds increase as the size of the security issue
increases.
B
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Interest cost that is capitalized should
a. be written off over the remaining term of the debt. b. be accumulated in a separate deferred charge account and written off equally over a 40-year period. c. not be written off until the related asset is fully depreciated or disposed of. d. none of these.
Which term is used to describe the ease with which people perform transactions and/or find information?
A. Usability B. Customer satisfaction C. Financial D. Conversion rates