Introduction to Corporate Finance 5th Canadian Edition by Laurence Booth Solution manual

Governments raise new financing via the debt markets. They issue T-bills as a source of short-term financing (i.e., less than one year), and they issue traditional bonds and Canada Savings Bonds (CSBs) for long-term financing. Businesses raise short-term financing in the form of debt through the use of loans, or by issuing commercial paper, BAs, etc. (all of which will be discussed in greater detail in later chapters). They raise long-term financing in the form of debt (i.e., through loans, by issuing bonds, or using other long-term debt instruments), or in the form of equity (i.e., by issuing common shares or preferred shares, etc.).
 
3. Distinguish between primary and secondary markets.
Primary markets involve the issue of new securities by the borrower in return for cash from investors (or lenders). Secondary markets provide trading (or market) environments that permit investors to buy and sell existing securities.
 
1.5 The Global Financial Community
 
Concept Review Questions
1. Explain why global financial markets are so important to Canadians.
On aggregate, if we add our foreign borrowings to the amount of direct foreign investment in Canada, it exceeded the sum of what foreigners borrowed from us and the amount that we invested directly abroad. 
 
2. Identify and briefly describe the two major stock markets in the United States. 
The New York Stock Exchange (NYSE) is the world’s largest and most famous stock market. The second largest and most important stock market in the U.S. is the Nasdaq Stock Market, or Nasdaq.