Statements about flotation costs on bonds

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Reference no: EM131622120

Which of the following statements about flotation costs on bonds is not correct?

a. Flotation costs on bonds need to be paid to the investment bank that manages the primary market transaction.

b. Flotation costs on bonds increase the Rd in the WACC formula.

c. Flotation costs on bonds lead to less capital per bond that flows to the firm.

d. Flotation costs on bonds are typically a higher percentage than flotation costs on equity.

e. Flotation costs on bonds could, in theory, be avoided by issuing bonds directly to investors.

Reference no: EM131622120

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