Which of the following statements is MOST correct concerning flotation

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.

ANSWER

B