Why is the standard flotation cost for an IPO equal to 7%? A) Because investment banking is a commodity business, and this fee is subsidized by the Securities and Exchange Commission (SEC) to ensure that banks continue to provide this necessary service to help maintain efficient capital flows B) None of the other answers are correct. C) This is required by the Securities and Exchange Commission (SEC) D) Because the standard fee has been defined as one-third of the top US corporate tax rate, which currently is 21%
Why is the standard flotation cost for an IPO equal to 7%? A) Because investment banking is a commodity business, and this fee is subsidized by the Securities and Exchange Commission (SEC) to ensure that banks continue to provide this necessary service to help maintain efficient capital flows B) None of the other answers are correct. C) This is required by the Securities and Exchange Commission (SEC) D) Because the standard fee has been defined as one-third of the top US corporate tax rate, which currently is 21%
Financial Management: Theory & Practice
16th Edition
ISBN:9781337909730
Author:Brigham
Publisher:Brigham
Chapter21: Dynamic Capital Structures And Corporate Valuation
Section: Chapter Questions
Problem 4MC: David Lyons, CEO of Lyons Solar Technologies, is concerned about his firms level of debt financing....
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Why is the
A) Because investment banking is a commodity business, and this fee is subsidized by the Securities and Exchange Commission (SEC) to ensure that banks continue to provide this necessary service to help maintain efficient capital flows
B) None of the other answers are correct.
C) This is required by the Securities and Exchange Commission (SEC)
D) Because the standard fee has been defined as one-third of the top US corporate tax rate, which currently is 21%
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