Practicing Success

Target Exam

CUET

Subject

Business Studies

Chapter

Financial Management

Question:

Process of raising resources involves some cost, like expenses on issue of shares, debentures, raising of loans etc. It is known as _____________.

Options:

Fixed Cost

Variable Cost

Total Cost

Floatation Cost

Correct Answer:

Floatation Cost

Explanation:

The correct answer is option (4) : Floatation Cost

The cost associated with the process of raising resources, such as expenses on issuing shares, debentures, raising loans, etc., is known as "4. Floatation Cost." Floatation costs are the costs incurred when a company raises capital or financial resources, and they include fees, commissions, legal expenses, and other expenses associated with the capital-raising process. These costs are deducted from the total amount raised to determine the net proceeds available for the company to use.