Question: Why is the standard flotation cost for an IPO equal to 7%? A. IPOs are a profitable business, and the investment banks exhibit cartel behavior

Why is the standard flotation cost for an IPO equal to 7%?

A. IPOs are a profitable business, and the investment banks exhibit cartel behavior to maintain the 7% cost

B. Because the standard fee has been defined as one-third of the top US corporate tax rate, which currently is 21%

C. Because investment banking is a commodity business, and this fee is subsidized by the Securities and Exchange Commission (SEC) to ensure that banks continue to provide this necessary service to help maintain efficient capital flows

D. This is required by the Securities and Exchange Commission (SEC)

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