flotation cost

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Flotation Cost

The costs that a company incurs when it makes a new issue of either stocks or bonds. Flotation costs include the costs of printing the certificates, paying the underwriters, government fees, and other associated costs. As new issues are intended to raise capital for the company, it is important for it to ensure that it will at least make back what it spends.

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.