Question : Which of the following statement is correct?
Statement 1: Flotation cost refers to a temporary arrangement of finance that bridge the gap between the need of long term financer and to secure it.
Statement 2: Bridge financing means the expenditure incurred in issuing a security.
Option 1: Both are true
Option 2: Both are false
Option 3: Statement 1 is true and statement 2 is false.
Option 4: Statement 1 is false and statement 2 is true.
Correct Answer: Both are false
Solution : Floatation cost means the expenditure incurred in issuing a security. This expenditure is made in brokerage under-writing commission advertising etc. Bridge financing refers to temporary arrangement of finance that bridge the gap between the need of long term finance and to secure it.
Hence, option B is correct.
