Which of the following relationships is true, regarding the costs of issuing the below securities? - 3889

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Request Description

Which of the following relationships is true, regarding the costs of issuing the below securities?

a.Common stock > bonds > preferred stock

b.Preferred stock > common stock > bonds

c.Bonds > common stock > preferred stock

d.Common stock > preferred stock > bonds

 

 

               Table 1 (Use this for questions 32-36)

Average selling price per unit      $16.00

Variable cost per unit              $11.00

Units sold                         200,000

Fixed costs                      $800,000

Interest expense                $ 50,000

 
Solution Description

Which of the following relationships is true, regarding the costs of issuing the below securities?

          a.   Common stock > bonds > preferred stock

          b.   Preferred stock > common stock > bonds