Summary And Conclusions

This chapter has looked at how corporate securities are issued. The following are the main points:

1. The costs of issuing securities can be quite large. They are much lower (as a percentage) for larger issues.

2. The direct and indirect costs of going public can be substantial. However, once a firm is public, it can raise additional capital with much greater ease.

3. Rights offerings are cheaper than general cash offers. Even so, most new equity issues in the United States are underwritten general cash offers.

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