flotation cost

Flotation Cost

The costs associated with the issuance of new securities.

Notes:

Flotation costs include both the underwriting spread and the costs incurred by the issuing company from the offering. Expressed as a portion of gross proceeds, costs generally increase as risks associated with the issue increase, or the size of the offering decreases.

Also known as floatation cost.

See also: IPO, Prospectus

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flotation cost

The expense involved in selling a new security issue. This expense includes items such as registration of the issue and payment to the investment banker. Flotation costs depend on the size and riskiness of an issue as well as on the type of security to be sold.