Flotation costs refer to:

A Trading commissions

B Costs incurred when a company issues new securities (underwriting, legal, registration)

C Dividend payments

D Interest expenses

✓ Correct Answer: Option B

Flotation costs are the total expenses of issuing new securities, including underwriting fees and regulatory costs.

💡 Why is B) the correct answer?

The correct answer to the question "Flotation costs refer to:" is Option B: Costs incurred when a company issues new securities (underwriting, legal, registration).

The other options — A) Trading commissions, C) Dividend payments, D) Interest expenses — are incorrect for this CFA Exam Prep question. As explained above: Flotation costs are the total expenses of issuing new securities, including underwriting fees and regulatory costs.

📚 About This CFA Exam Prep Practice Question

This 2-level CFA Exam Prep question from the Corporate Finance topic is part of BrainForge Quiz's free exam preparation library. Each question includes the correct answer and a detailed explanation to help you understand the underlying concept, not just memorize the answer.

How to use this page: Read the question above, consider all four options (A through D), then check the highlighted correct answer and explanation. For active timed practice, start a free CFA Exam Prep practice test or use flashcards for spaced repetition review.

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Flotation costs refer to:

✓ Correct Answer: Option B

📚 About This CFA Exam Prep Practice Question

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